Underemployment India’s biggest economic challenge: NITI Aayog’s Arvind Panagriya
Panagariya said rapid growth can be achieved by moving workers out of agriculture to industry and from smaller enterprises to bigger ones.india Updated: Jul 10, 2017 20:03 IST
Underemployment is probably the biggest economic challenge that India faces right now, NITI Aayog vice chairman Arvind Panagariya said on Monday.
Panagariya, who was speaking at the Aayog’s day-long conference of state chief secretaries in New Delhi, said rapid growth can be achieved by moving workers out of agriculture to industry and from smaller enterprises to bigger ones.
His remarks come at a time when the three-year-old Narendra Modi government is facing a barrage of criticism on jobless growth. Panagariya had last month said the claims were “somewhat bogus” in his defence of the government.
“Underemployment is probably the biggest economic challenge we face… as many as 44.2 crore workers or 91.2% of the total were employed in agriculture or enterprises with nine or fewer workers,” he said.
He said excessive employment in agriculture (46.9%) with lower output (18%) was slowing growth, and tackling that is the way to achieving growth.
“At the aggregate macro level, bringing about rapid growth is most critical — no major success in poverty alleviation is likely without it,” the economist said.
“If we set the output per worker in agriculture equal to 1, then output per worker in industry is 5 and that in services 3.8,” he said. “In other words, even at the current productivity levels in each sector, moving one percentage-point workers out of agriculture into industry can increase the GDP by 1.5%.”
The Aayog vice chairman said that the governments at the Centre and the states need to create a policy environment for enterprises to grow larger.
“Remember that if we want to increase the total (public plus private) expenditures on education, health and infrastructure, we have only two options: we either cut expenditure on something else or increase the GDP. Unfortunately, our ability to cut the expenditures on items other than education, health and infrastructure is extremely limited,” he cautioned. “Therefore, raising the GDP is the only practical option.”