Mahindra said that there are some gaps that need to be filled in to take full advantage of the opportunities arising out for the country. He was addressing the shareholders at the company’s 76th annual general meeting in New Delhi.
“The most important of these (gaps) is jobless growth. The Indian unemployment rate is hovering around 7-8%, according to CMIE (Centre for Monitoring Indian Economy). This is because job growth has not kept pace with GDP growth. Only 40% of the labor force that is capable of working is actually working or looking for work. The biggest sufferers are youth and women.”
The country’s unemployment rate in July fell to 6.8%, the lowest level in the last six months, amid rising agricultural activities during the monsoon, according to the latest CMIE data.
Earlier this week, the erstwhile Reserve Bank of India (RBI) governor Raghuram Rajan too highlighted the issue of jobless growth in India, even as its economy grows at a fast pace. “A lot of this growth is jobless growth,” Rajan said in an interview with NDTV. “Jobs are essentially Task One for the economy. We don’t need everybody to be a software programmer or consultant but we need decent jobs,” Rajan said.
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“With one of the largest youthful populations in the world, it’s easy to imagine the potential for social unrest if jobs don’t grow along with the youthful population,” the Mahindra group chairman said. “The government is trying to do its bit and has (also) announced plans to hire one million people in government jobs by 2023, given that the country has a 900 million strong workforce, there’s a lot more to do,” Mahindra said. According to him, in the private sector, job creation is happening mainly at the lower end of the gig economy, which is not “enough”.
“To create jobs on a mass scale and to take advantage of the global factors that are moving in our favor, we must boost manufacturing. Even more important than large conglomerates are MSMEs that can take advantage of the trend toward localization of manufacturing and the use of technology to create the scale,” Mahindra said.
Mahindra said in the US, 90 percent of new businesses are mom-and-pop shops and while their investment may not be huge, they create 67 percent of new jobs in the country.
“In India, too, taken together, MSMEs can be a spine for growth. Even though inflation is a concern, from the business angle, it can nevertheless provide a minimum threshold of returns on productive assets,” he asserted.
(With agency inputs)