Raghuram Rajan's advice for Nirmala Sitharaman's Budget: ‘More jobs needed’
Raghuram Rajan said manufacturing is not the "holy grail" for India's success as the sector faces challenges like limited export absorption and competition.
Former Reserve Bank of India (RBI) Governor Raghuram Rajan said that India needs to prioritize its services sector over expanding manufacturing for sustainable economic growth as well as job creation.
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Speaking at the Annual World Bank Conference, he said that manufacturing is not the "holy grail" for India's economic success as the sector faces challenges like limited export absorption and competition from countries like China, Vietnam, Indonesia, and Mexico. He said, “Both politically and economically, the manufacturing ladder is harder to climb.”
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Talking about the services embedded in manufacturing and how they can add more value compared to traditional manufacturing, Raghuram Rajan said, “The significant value added is in the intellectual property within services, not in the actual manufacturing. We need to view services as the potential leading edge of the economy.”
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Stressing on the need for India to improve education and healthcare services, he said that fostering innovation and creativity is important for capturing high value-added opportunities.
Job creation should be India's priority which does not only mean high-end positions. He said, “The need of the hour is more jobs” as new jobs and future employment opportunities should be of concern.
Raghuram Rajan also emphasized on the need of creating jobs that match existing skills while also investing in training programs for future prospects.