Raghuram Rajan Raises Employment Concerns Amid India's Growth Momentum

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Disclaimer: The following article discusses statements made by former Reserve Bank of India (RBI) Governor Raghuram Rajan regarding India's employment situation. Readers should note that the views expressed are those of the individual and may not reflect the entirety of the situation.

Raghuram Rajan Highlights Employment Concerns Amid India's Growth Trajectory


In an exclusive interview with The Economic Times (ET) Online, former RBI Governor Raghuram Rajan expressed apprehensions regarding India's employment landscape, despite signs of economic growth. Rajan emphasized the urgency of addressing the dearth of private sector jobs, pointing to a notable trend of individuals gravitating towards government employment.

"The broader question is, is this growth providing enough jobs? The answer here is a lot more nuanced. It is providing more jobs in construction, and the government has engaged in a tremendous amount of infrastructure construction. That has also energized private development of houses and so on," Rajan remarked. However, he underscored that despite government initiatives, sectors like manufacturing have not witnessed a significant surge in employment opportunities.

Rajan's remarks coincide with a time when unemployment remains a pressing issue in India. A survey conducted by Lokniti-CSDS revealed that 27% of voters rank unemployment as their top concern, with nearly 62% of respondents finding it increasingly difficult to secure employment over the past five years. Critically analyzing the recent whitepaper released by the NDA government, Rajan pointed out the glaring absence of any mention of 'unemployment,' emphasizing the need for attention to this crucial issue.




Highlighting a disconcerting reality, Rajan noted the enduring allure of government jobs in India. "Huge numbers of people are applying to government jobs because private sector jobs are not being created," he stated in the interview with ET.

Rajan referenced Prime Minister Narendra Modi's pre-election pledge in 2014 to generate 10 million jobs for India's youth, acknowledging the prevailing unemployment challenges. Government estimates indicated an unemployment rate of 5.4% in FY23, up from 4.9% in FY14, according to reports from Reuters. However, data from the Centre for Monitoring Indian Economy (CMIE) suggested a figure exceeding eight percent for February 2024.

Furthermore, Rajan cautioned against relying solely on CMIE data, citing its volatility, and advocated for enhanced methods of tracking unemployment in India. "The best government source is the Periodic Labour Force Survey (PLFS) data which comes once a year, which is too slow to make any serious decisions based on employment numbers," Rajan emphasized, calling for bipartisan cooperation to address this critical issue.

In conclusion, Rajan's observations highlight the imperative of prioritizing employment generation alongside economic growth, urging policymakers to adopt comprehensive strategies to tackle India's employment challenges.


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