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India is likely to clock a 7.5 percent economic growth in the current fiscal year, NITI Aayog Vice Chairman Arvind Panagariya said, even as he acknowledged that creation of "good jobs" in the country remains a big challenge.
Panagariya, who had presented India's 'Voluntary National Review Report on Implementation of Sustainable Development Goals' at the UN High Level Political Forum on Sustainable Development 2017 last week, however, said that job creation in the country, especially at the lower, semi-skilled level, "truly is the biggest challenge, probably bigger than growing at eight percent."
He said it is unfortunate that India's better performing sectors such as automobile, auto parts, engineering goods, petroleum refinery, pharmaceuticals and IT-enabled services, are not very employment-intensive.
Panagariya said he does not agree with the classification in some sections of the media that India's economic growth is a jobless growth.
Panagariya, however, acknowledged that there is not enough creation of good jobs that pay good wages.
He noted that China, which is the major exporter of all these products, is experiencing very high wages and is already quitting some of the space in these labour intensive sectors.
"It is a good time for India to move into those sectors," he said.
With the Indian government implementing the Goods and Services Tax, Panagariya said while there could be some teething troubles as the country embraces the ambitious financial reform, he does not see it significantly impacting economic growth going forward.
"On some sort of an immediate negative impact (of the GST on economic growth), personally I don't think there will be a kind of negative impact that you will be able to actually measure separately," he said, adding that there will undoubtedly be teething problems initially because even if the country is small, when an entirely new system is instituted, it takes time for people to learn.
"The vastness of the country makes it more complicated and you are dealing with 29 different states and different levels of income, different capacities to implement in different states," he said.
"I think things should settle down in a relatively short period. I would say on the whole, we should see within a year's time positive results should be coming out and in the longer run, it should enhance efficiency," he said on GST's impact going forward.
At an interactive multi-stakeholder panel hosted at the UN by India's Permanent Mission to the UN, the NITI Aayog and think-tank Research and Information System for Developing Countries last week, Panagariya had said that India's GDP could rise to about $8 trillion over the next 15 years if by a conservative assumption, the country registers an economic growth of 8 percent annually.
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