Experts: Tackling joblessness top challenge for Indian govt

BENGALURU — Tackling India's chronic joblessness will be the biggest challenge for the government over the next five years, even as the country remains the world's fastest-growing major economy, say policy experts polled by Reuters.

Asia's third-largest economy grew more than 8 percent last fiscal year, driven by government capital expenditure that so far has failed to spark sufficient business spending to create enough work, particularly for young people in a country of 1.4 billion.

Prime Minister Narendra Modi's Bharatiya Janata Party lost the parliamentary majority it has held for the past decade in national elections that ended earlier this month over widening inequality, relentless inflation pressure — particularly on food — and a lack of well-paying jobs.

An overwhelming 91 percent majority of development economists and policy experts, or 49 of 54, said unemployment would be the biggest economic challenge for the government's term in a survey taken from May 15 to June 18.

"In India, we have a very peculiar problem — supposedly very high aggregate growth rates and no increase in employment," Jayati Ghosh, a professor at the University of Massachusetts Amherst, said. "Modi came to power offering aspirational youth jobs and a better life, but it's gotten significantly worse since then.

"You have to have a job-specific strategy ... You have to dramatically increase public employment in basic social services, health, education, nutrition, sanitation."

The BJP has acknowledged employment was a factor in the election and said "whatever best can be done is being done".

However, most economists questioned the government's ability to provide jobs or accurately measure its success or failure. Others underscored the role business needs to play in bringing about material change in employment.

"The government alone cannot possibly create the jobs required to absorb the millions entering into the workforce every year," Rajeswari Sengupta, an associate professor of economics from the Indira Gandhi Institute of Development Research in Mumbai, said. "That requires the private sector to step up with high, sustained investment."

Over the past decade, the BJP government has significantly ramped up spending on the country's infrastructure, but so far business spending has not followed through in anywhere near the same volume and intensity.

Gross fixed capital formation, often used as a measure for private investment, has risen at a compound annual rate of about 8 percent since 2014, lower than the 14 percent during the previous decade.

Identifying impediments

"The government needs to identify impediments to private investment, remove policy hurdles and obstacles holding back a revival ... and let the private sector do its job with minimum government hindrance," Sengupta said.

Asked what the government should do to help create jobs, many respondents said spurring this follow-through from private investment was key.

Other recommendations included raising education standards, reforming tax structures and increasing cooperation between central and state governments.

One of the biggest challenges to progress in creating jobs is there is no universally accepted unemployment rate in India, partly because it is very hard to measure in a country that has close to 1 billion people eligible to work. Without a commonly agreed starting point, it is difficult to measure success.

Agencies Via Xinhua