'India's Economy Shows Promise, But Needs 8% Growth For Adequate Job Creation': Raghuram Rajan

India's former Reserve Bank of India Governor, Raghuram Rajan, has emphasized the need for India's economy to grow at a rate exceeding 8% in order to generate sufficient jobs for the nation's burgeoning population. Speaking via video link at an event in Beijing, Rajan highlighted the necessity for faster economic growth to tackle unemployment and provide opportunities for India's youthful workforce.

"We should be going at 8%-8.5% given the needs of the population and the need for jobs," stated Rajan. While India's current economic growth rate of 6%-6.5% outpaces many other nations, Rajan argues that it remains insufficient when considering the imperative of job creation for the vast number of young individuals entering the workforce.

India is grappling with an unemployment rate that reached 10.05% in October, the highest in more than two years, according to the Centre for Monitoring Indian Economy in Mumbai. To address this, HSBC estimates that India will need to generate 70 million new jobs over the next decade. With a growth rate of 7.5%, only two-thirds of this employment challenge would be met. The issue of high joblessness is also a concern for Prime Minister Narendra Modi, particularly as he seeks a third term in office in the upcoming elections. His administration has been actively working to address the problem, with the distribution of job appointment letters as part of a promise to provide one million government jobs by the year's end.

Rajan emphasized the necessity of preparing the Indian workforce to compete with other efficient manufacturing nations, such as China and Vietnam. While India has made progress moving up the value chain, including the production of iPhone components, Rajan noted there is still a considerable distance to go before full cell phone manufacturing can be achieved within the country.

In addition to job creation, Rajan made several noteworthy remarks during his speech:

Economic Recovery: Rajan expressed optimism about India's economic recovery from the COVID-19 pandemic, noting that steady growth is finally visible.

Drivers of Growth: He attributed India's growth to higher government spending on infrastructure, efforts to clean up balance sheets, and increasing demand from the upper middle class.

Technology Gap: Rajan highlighted that China's innovation in chip manufacturing is far ahead of India, indicating a need for technological advancement.

US Economic Outlook: Rajan also commented on the United States, stating that a soft landing for its economy is challenging, with a greater than 50% probability of the economy slowing too much.

As India continues to navigate the complexities of economic growth, Rajan's insights serve as a reminder of the significance of creating more jobs and enhancing the competitiveness of the Indian workforce in a global context. Achieving a growth rate of over 8% is a crucial step towards addressing the nation's employment challenges and ensuring the economic well-being of its vast population.

*Inputs from Reuters*