Rajan says govt should promote labourintensive industries to generate jobs

PTI New Delhi: With 7 per cent economic growth, India is not creating enough jobs as reflected by the number of applicants for vacant posts in some states, Reserve Bank's former governor Raghuram Rajan said and suggested the government needs to focus on promoting labour-intensive industries to generate employment. Rajan further said some Indians, especially those at upper level, are comfortable and have high incomes, but consumption growth from the lower half of the country has still not recovered to pre-pandemic level.

"That is the unfortunate part...You would think with 7 per cent growth, we would be creating a lot of jobs. But if you look at our manufacturing growth, it is more capital intensive," he told PTI. Rajan was asked whether the Indian economy, which is growing at 7 per cent, is creating enough jobs. According to him, the industries that are more capital- intensive are growing faster, but labour-intensive industries are not growing. "It is not going well at the lower level. I think the desperate need is for jobs. And you can see this, forget the official statistics.

"You can see it in the number of applications for government jobs, which are overwhelming," said Rajan, who is a professor of finance at US-based Chicago Booth. He said that in the medium term, the Indian economy will grow at 6-7 per cent. While welcoming the apprenticeship schemes announced by the finance minister in this year's Budget, Rajan said, "But we have to monitor that very closely, see what works and expand what works much more." Finance Minister Nirmala Sitharaman had announced in the Union Budget of FY25 that the government will launch three employment-linked schemes based on enrolment in Employees' Provident Fund Organization (EPFO). Citing examples of Vietnam and Bangladesh, which are doing well inabour-intensive industries like textile and leather, he said.