Former Reserve Bank of India Governor Raghuram Rajan has remarked that India's economy as the world's most populous country is exhibiting signs of steady growth, but it needs to expand at a rate of more than 8% to create enough jobs.
"Given the needs of the population and the need for jobs, we should be targeting 8%-8.5%. Economic growth of 6%-6.5% is impressive in comparison to other nations, but relative to our need for jobs, I think it's still somewhat slow because we have a lot of young people who need to be employed," stated Rajan.
While India's growth has outperformed that of other major nations, the country is not creating enough jobs to accommodate the millions of individuals who enter the labor force each year. According to Mumbai-based researcher Centre for Monitoring Indian Economy, the overall unemployment rate rose to 10.05% in October, the highest in more than two years.
According to HSBC, the government will need to create 70 million new jobs over the next ten years, and 7.5% growth will only solve two-thirds of the jobs crisis. High unemployment is also a cause of concern for Prime Minister Narendra Modi, who is seeking a third term in office in next year's elections. His administration officials have been striving to address the issue while also strengthening their credentials by distributing job appointment letters as part of his goal to generate one million government jobs by the end of this year.
Rajan stated that the country must prepare its workers to compete with other efficient manufacturing nations such as China and Vietnam. "India is trying to move up the value chain, and you're seeing some signs of that happening," he said, citing iPhone component output. However, he sees "a long way to go, to manufacturing full cell phones in India." "As far as India's growth goes, we are recovering from the pandemic and now finally we are seeing some steady growth," Rajan said in his speech.
Higher government infrastructure spending, balance-sheet cleanup, and demand from the upper middle class are boosting growth. China has enormous innovation in semiconductor manufacturing, whereas India lags far behind.