How the economy has failed India’s youth and women: Raghuram Rajan

Brut India

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

Transcript

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.

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