Rama Krishna Sangem
Now here’s another side of India’s growth story. India is making a big mistake believing the “hype” around its strong economic growth since there are significant structural problems that need to be fixed for the country to meet its potential, former central bank Governor Raghuram Rajan said.
The biggest challenge a new government must grapple with after elections is improving the education and skills of the workforce, Rajan said in an interview. Without fixing that, India will struggle to reap the benefits of its young population, he said, in a country where more than half of the 1.4 billion population are below the age of 30.
“The greatest mistake India can make is to believe the hype,” he said. “We’ve got many more years of hard work to do to ensure the hype is real. Believing the hype is something politicians want you to believe because they want you to believe that we have arrived.” But it would be a “serious mistake for India to succumb to that” belief, he added.
Dismissing Prime Minister Narendra Modi’s ambition to make India a developed economy by 2047, Rajan said it was “nonsense” to talk of that goal “if so many of your kids don’t have a high school education” and drop-out rates are high.
Growth possible, if only we create more jobs
We have a growing workforce, but it is a dividend only if they’re employed in good jobs,” he said. “And that’s, to my mind, the possible tragedy that we face.” India needs to firstly make the workforce more employable, and, secondly, create jobs for the workforce it has, he said.
Rajan cited studies showing a drop in the learning ability of Indian school children to pre-2012 levels after the pandemic, and that only 20.5% of grade three students could read a grade two text. Literacy rates in India also remain below other Asian peers like Vietnam.
“That is the kind of number that should really worry us,” he said. “The lack of human capital will stay with us for decades.”
