Arvind Panagariya weigns in on the jobless growth allegations.
Niti Aayog Vice-Chairman Arvind Panagariya on Thursday termed as a "bit bogus" the claims made on the jobless growth by a section of economists and Opposition parties and claimed that 7-8% growth rate is benefiting the labour market a lot.
"The whole point we continuously make about the jobless growth is a little bit bogus. There is some substance to it, but a little bit bogus," Panagariya said during a discussion on the planning body's action agenda and the economy at the Reserve Bank headquarters here. There are claims that investments are not picking up, jobs are not being created, but despite all these, the country's economy is growing at 7-8%, he said.
"If 7-8% growth happens, it cannot happen that the labour market is not getting any benefit out of it. When such growth happens it cannot be jobless...jobs are being created," he said without substantiating with supporting numbers except that the unemployment rate is only around 3%. Panagariya, however, said there are no proper surveys covering those jobs which are being created. "We need to put a system in place where we collect the data on employment in a better manner," he said, adding the problem the country is suffering with is under employment. "Unemployment is a lesser problem. You can look at the surveys that have been done in the past. Consistently, you will see that unemployment rates are not high," he said.
Panagariya said if one considers the most liberal definition of employment, then the unemployment rate is only 2-3%. If the most conservative definition of employment is considered, then unemployment is 5-8%, he added. One easy way to create a large number of jobs is to develop coastal employment zones that lay emphasis on the large scale jobs, "but to achieve we need to bring in global expertise".
Talking about protectionism, he said it was not new but this time there are new nuances to it. "There is some threat from protectionism, there is no doubt about it, but it seems to be moderating a bit in the way it has evolved in the last six months".
Today, the merchandise export market alone is US$ 18 trillion while the services market is another US$ 5-6 trillion globally. But our share is just 1.7% of this while China's share is about 15%, he said. "What matters is if we can increase our share to 5-6%, then whether the total market is US$ 16 trillion or US$ 20 trillion, (it) does not matter. We must get our house in order and create incentives so that global firms come to us and not (go) to Vietnam or Bangladesh," he said.
On the infrastructure sector, Panagariya said the government was working on reviving the sector and the fiscal issues is central to this. "Within the available resources, we are moving forward. I do feel sometimes that we lost a little bit of time with NPAs in some key sectors. I think we are tackling that problem now. Going forward, I am a lot more optimistic that we will be able revive the sector," he said. Congratulating RBI governor Urjit Patel for taking a firm stance on the bad assets problem, he said Patel has taken the problem head on.
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