RBI highlights major challenges before growth story

Reserve Bank of India Governor D Subbarao Friday highlighted major challenges, including raising farm productivity, infrastructure deficit, unemployment, financial inclusion and governance, which needed to be addressed to move up the "growth ladder".

"... for India to regain its growth momentum and indeed accelerate it further, we need to address several challenges that we need to move up the growth ladder," he said while delivering Haksar Memorial Lecture in Chandigarh on Friday.

Underlining the need to step up farm production to meet shortages, he said it was necessary to launch the second green revolution and increase investment in rural infrastructure and supply chain.

"Even as its (farm sector) share may be small and declining, agriculture still accommodates 53 per cent of labour force. Besides, agriculture has very vital supply demand linkages with other sectors of economy," he noted.

Noting that unemployment was another biggest challenge to make growth inclusive, he said there was an enormous amount of unemployment and underemployment in rural sector, though the size and nature of problem remaining unclear.

"India's high-end IT service sector might be dazzling the world but contrary to popular perception, it employs no more than three million. So the problem of jobs is that a lot of people are out of work...," he said.

"Even as demand for skills increases, the supply side is lagging far behind. India churns out 3,50,000 engineers every year, but barely a quarter of them are employable. We have 7,000 ITIs but their curriculums are woefully outdated," he said.