Ex-RBI Governor Raghuram Rajan isn’t buying into the hype of India being the largest and strongest growing economy. He explains why.
🎥 King's College London National Indian Students and Alumni Union UK - NISAU
🎥 King's College London National Indian Students and Alumni Union UK - NISAU
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00:00In other words, we need a learning government, a government that sees what's happening, hears it, and adjusts accordingly.
00:06Not a government that says, I know, here it is, take it or leave it.
00:09Think about how much richer India would be as a country if its frustrated youth, its women, could get good jobs.
00:19We need to work on this. India's growth cannot be taken for granted.
00:33Our biggest problem is we're not creating enough good jobs.
00:37You can see it with the protests against the Agni Path scheme.
00:42A lot of young people took to the streets. I'm hearing this.
00:45Simply because government jobs are, in a sense, the last resort, given there are few other jobs available.
00:53You've all heard about 12 million applicants in the railways for 35,000 jobs.
00:58The worrisome thing about all these people looking for government jobs is not just the fact that jobs are so scarce,
01:08but the fact that they're so scarce despite the fact that our biggest minority, women, are not really a labor force in a big way.
01:19India's female labor force participation is among the lowest in the G20.
01:26We rivaled Saudi Arabia for how bad it was for women.
01:31In fact, now Saudi Arabia has become much better because they focus on increasing labor force participation.
01:39They've got it up to 33%. We've actually gone down over the pandemic in terms of female labor force participation.
01:47Think about how much richer India would be as a country if its frustrated youth, its women, could get good jobs.
01:57Therefore, despite all the ra-ra, strongest growing large economy in the world, etc., etc.,
02:04the fact is the economy is not working for many of our youth.
02:09Our record, I don't want to start by saying there's only wrong.
02:14In fact, India's record is very good if you look at the two decades after the 1991 reforms.
02:21We grew at an average of about 7% a year, which is, you know, with very few exceptions, one of the strongest records.
02:31We have successes, but if we dwell only on them and don't assess our failings critically, we increase the chance of underperformance.
02:41I would argue it's not the fault of our people as much as it is a failure of imagination of our politics and leadership.
02:50And I would say that failure is more recent than in the more distant past when we grew very strongly.
02:58What worked in those early decades was really a willingness to trust the people,
03:04to create a framework where we liberalized and allowed, you know, people to utilize their creativity and enterprise
03:12by creating the kinds of frameworks and infrastructure that freed them.
03:17What is the government's vision? The current government's vision seems to center around the term Atmanirbha or self-reliance.
03:25We're going to be dependent on ourselves. Sounds good. And in some ways, it is a continuation of the past I was talking about.
03:35But in some ways, Atmanirbha takes us back to a more distant and failed past.
03:41Before the period of reforms, when we focus primarily on physical capital and producing goods, not human capital and services.
03:52And we try to do it through protection and subsidies, not through liberalization and competition.
03:59But one thing that certainly is worrisome is the neglect of human capital.
04:06Think, for example, of how many children have been out of school for the last two or three years.
04:11How much have these kids really learned? And if you've been out of school for two years,
04:16it doesn't mean that you're two years behind because you've also forgotten two years worth of school.
04:21So you're actually three or four years behind. And that's what the studies are showing.
04:25These kids are way behind. Why don't you see more concern about this?
04:29Why don't you see more money devoted to this?
04:33And I would argue that it's partly the responsibility of the states, but it's also partly the responsibility of the center.
04:40We are focusing too much on the wrong things. It is not physical capital.
04:45It's not the PLI scheme, which is most important as getting these kids back to school, getting them educated once again.
04:52What will it take to increase service exports from India?
04:55What do we need to do there? And if we need to choose between putting a dollar of government money here or a dollar of government money there,
05:03let's think about where it is more appropriate to put that money. India has a lot it can do in services,
05:12but relying on its past of democratic, liberal openness.
05:21And if we do that, we can be the first country that transitions directly from agriculture to services without going through manufacturing.
05:32Of course, we're going through a more difficult, different path.
05:36We need a government that is more pragmatic, transparent, decentralized and open to challenge.
05:42In other words, we need a learning government, a government that sees what's happening, hears it and adjusts accordingly.
05:48Not a government that says, I know, here it is, take it or leave it.