Yesterday, got a chance to listen to D. Subbarao, RBI Governor, at the IIT Kanpur
Alumini Meet held at Dogra Hall, IIT Delhi. Subbarao nicely articulated the
major challenges in front of India. These needs to be addressed, the sooner the
better, so that India’s growth story can be smooth:
1. Agriculture contributes 15% of the GDP and employs 55% of the population. We have to get people out of it, and provide them jobs.
2. Challenges of Jobs- Today India has primarily low level jobs and high level jobs(in services sector). We need to create a lot of middle level jobs, if we want to reap the benefits of demographic dividend. These middle level jobs will come from the manufacturing sector.
3. Skill improvement- Skill is considered as a merit good, in which only government can invest. Private firms do not have enough incentive in this because there is uncertainty of employee retention. We need to strengthen ITI system like IITs. A corollary of the above point.
4. Managing urbanization- In 1991, there was 26% urbanization now it is 36%. Still it has to go a long way. The problems that we talk about urbanization, are our problems of managing it, we need to get rid of them. Urbanization is inevitable for exposure from a rural person’s angle.
5. Infrastructure Deficit- We do not have enough infrastructure in the economy to sustain a trillion dollar investment in next five years. Infrastructure creation is a long term financing which is undertaken by pensions and Provident Funds in developed countries. Due to their under-development in India, banks are involved in infrastructural creation, but banks role is to look into short term finances.
6. Improving social sector outcomes, rather than just talking about increasing their share of GDP. Sri Lanka spends less on health care, but has better outcomes. In education, we need enrolment, retainment and achievement. We have achieved first two, now it is time for third.
7. Globalization is anyways happening, we have to learn to manage it.
8. Providing stable and predictable macroeconomic environment to attract domestic and foreign investors.
9. India must become a knowledge society, innovation society. Then only we can, attract the benefits of globalization.
10. Good Governance- Without it, no matter what we do, nothing will succeed.
1. Agriculture contributes 15% of the GDP and employs 55% of the population. We have to get people out of it, and provide them jobs.
2. Challenges of Jobs- Today India has primarily low level jobs and high level jobs(in services sector). We need to create a lot of middle level jobs, if we want to reap the benefits of demographic dividend. These middle level jobs will come from the manufacturing sector.
3. Skill improvement- Skill is considered as a merit good, in which only government can invest. Private firms do not have enough incentive in this because there is uncertainty of employee retention. We need to strengthen ITI system like IITs. A corollary of the above point.
4. Managing urbanization- In 1991, there was 26% urbanization now it is 36%. Still it has to go a long way. The problems that we talk about urbanization, are our problems of managing it, we need to get rid of them. Urbanization is inevitable for exposure from a rural person’s angle.
5. Infrastructure Deficit- We do not have enough infrastructure in the economy to sustain a trillion dollar investment in next five years. Infrastructure creation is a long term financing which is undertaken by pensions and Provident Funds in developed countries. Due to their under-development in India, banks are involved in infrastructural creation, but banks role is to look into short term finances.
6. Improving social sector outcomes, rather than just talking about increasing their share of GDP. Sri Lanka spends less on health care, but has better outcomes. In education, we need enrolment, retainment and achievement. We have achieved first two, now it is time for third.
7. Globalization is anyways happening, we have to learn to manage it.
8. Providing stable and predictable macroeconomic environment to attract domestic and foreign investors.
9. India must become a knowledge society, innovation society. Then only we can, attract the benefits of globalization.
10. Good Governance- Without it, no matter what we do, nothing will succeed.
Nice...
ReplyDeleteBhaskar, what did Dr. Subbarao mean by middle level jobs??
- Vikram
He meant jobs in Manufacturing sector, which are kind of moderately paying, with respect to agriculture and service sector. Later two are generally considered as two extremes. After all, when we are educating more youths, giving them skill training, we need to create job opportunities for them as well.
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