Rajan said in an interview that the biggest challenge the new government will have to tackle after the elections is improving the education and skills of the workforce. Unless it improves, India will struggle to reap the benefits of its youth, he said. More than half of the 1.4 billion people are under the age of 30.
“The biggest mistake India can make is believing the hype,” he says. “We have many more years of effort to make sure the hype is real. Believing the hype is what politicians want you to believe, and that’s because they Because we want you to believe that we have arrived.” However, he added, “It would be a grave mistake for India to succumb to that idea.”
dismissal of prime minister narendra modiRegarding the goal of making India a developed economy by 2047, Rajan said it is “nonsense” to talk about the goal “if so many children are not getting a high school education and the dropout rate is high”. ”.
“Our workforce is growing, but it only pays off if they have good jobs,” he said. “And I think that’s the tragedy we could face.” He said India must first of all increase the employability of its workforce and secondly, create jobs for its workforce. He said it was necessary to create a
Rajan cited research showing that after the pandemic, the learning ability of Indian schoolchildren has declined to pre-2012 levels, with only 20.5% of third-graders able to read second-grade textbooks. India’s literacy rate also remains below other Asian countries such as Vietnam.
“This is a really worrying number for us,” he said. “Human capital shortages will persist for decades.”
Rajan said India needs to do more to achieve 8% growth on a sustainable basis, dampening some of the recent optimism about the economic outlook.
Foreign investors are flocking to India to take advantage of rapid economic growth, with the government forecasting growth to reach more than 7% next fiscal year, making it the world’s fastest-growing major economy. .
Rajan said the Modi government’s policy choice of spending more on subsidies for semiconductor manufacturing than the annual budget for higher education was a bad one. Subsidies to semiconductor companies setting up operations in India were estimated at 760 billion rupees ($9.1 billion), while subsidies earmarked for higher education were 476 billion rupees.
chip manufacturing
He said the government has focused so much on high-profile projects like chip manufacturing that it has not focused on developing the education system to produce the well-trained engineers needed for these industries. said.
“The government’s ambition to become a great country is real,” he said. “Whether they pay attention to what they need to do is another matter. Projects with prestige that hint at greater national ambitions, such as chip manufacturing, while still leaving the foundations to contribute to a sustainable chip manufacturing industry.” I worry that we are becoming more attached to it.”
Rajan, a finance professor at the University of Chicago Booth School of Business, is a prominent commentator on the global economy and an outspoken critic of Indian policy.he left reserve bank of india for academia in 2016 after coming under attack from hardline politicians over his views and having his term as governor not extended.
He recently co-authored a book titled Breaking the Mold: Reimagining India’s Economy Future and has published a series of videos on his LinkedIn profile to provide perspective on India’s growth prospects.
Besides improving education, Rajan highlighted a number of policy priorities for the new government, including reducing inequality and increasing labor-intensive production. He also said that India’s governance system is too centralized and devolving control to the states would improve development.
“What we need is a pragmatic approach,” Rajan said. Quoting former Chinese leader Deng Xiaoping, who spearheaded economic reforms, Rajan said that if India learns anything from China, it is that “It doesn’t matter whether the cat is black or white; The important thing is whether or not we catch them.” He said.
