Jobs for the Govt by Raghuram Rajan

As with every Indian election, this one is touted as one that will shape the future of India. Political parties seem to be either emphasising national security or job-creating economic growth. The reality is that these are not two different issues – they are the same.
Let me explain: There is no immediate national security emergency – we have faced terrorism and cross-border interference for decades now. Over the medium term, however, our national security depends primarily on our economic strength. If we do not have strong job-creating economic growth in coming years, we will suffer on multiple fronts. We will not have the resources to upgrade our military’s equipment. We will not have the economic clout that will persuade other nations to arrest our terrorists and extradite those who flee our laws. And we will have rising levels of internal political unrest as our unemployed youths start venting their frustration. One cannot have meaningful national security without strong job-creating economic growth.
On both growth and jobs, it is unquestionable that we need to do better. Given the discrepancy between government claims on these, and those of quasi-government and private bodies, it is better to turn to other evidence. On growth, the slow pace of private investment thus far suggests low capacity utilisation and the absence of animal spirits that would otherwise accompany strong growth. On jobs, in a survey of 2.7 lakh voters by the Association for Democratic Reform, the most frequent concern on voter minds was “better employment prospects” (47% of respondents). Even if the government thinks good jobs are plentiful, the electorate seems concerned.

How will we create jobs? Undoubtedly, we have to elevate our pace of growth, especially in job creating sectors. And that requires a new generation of reforms since the old ones are running out of steam. Consider just one sector, construction, to see the range of inter-linked reforms that are needed.
Construction – of affordable housing, roads, railways, ports, airports and commercial real estate – is the primary source of jobs for the moderately skilled in many emerging markets. Yet our construction sector is held back, in part by a cumbersome process of land acquisition, and in part by limited access to credit. The next government will have to learn from best practices in states how to acquire land in a transparent, fair and speedy way, and convert that learning into legislation. That will help reduce the risk in financing large infrastructure projects, to which delays in land acquisition contribute significantly.
Better digital mapping and titling of land, a state subject, will help ease land acquisition. We have discussed land mapping and titling for many years, and a few states have done it, but many have not. This needs to be expedited. It will not just facilitate land sales; a collateral benefit will be to ease land leasing. Many marginal farmers can leave agriculture, getting good rents by leasing to farms of now-viable size.
Land use is also constrained by a plethora of permissions, including zoning and environmental permissions. There is no question that the unsightly and damaging development that mars so much of India needs to be stopped or even reversed. For instance, we cement over water catchment areas so that when it rains heavily we get floods, but too little water is absorbed to replenish ground water reserves. Unfortunately, our current system of permissions often results in delay and corruption without leading to better development. One focus of the next government must be to streamline government itself, so that it is fit for the purpose intended. Instead of focussing on World Bank indicators of “Doing Business”, which are primarily based on a few selected indicators in Delhi and Mumbai, we must lighten the actual compliance load for business, while ensuring development is sustainable.
The private sector also needs reform. Banks have shied away from lending to firms in the construction sector because of their murky practices. Finance companies have filled the gap, but they have gotten into trouble. Construction companies have to come clean. A transparent land acquisition process, as well as more regulations improving practices, like the Real Estate (Regulation and Development) Act, will help. A cleaned-up construction sector will attract formal financing, which could drive out the dirty money that it has historically relied on.
Common themes show up in other sectors. The broader point is that there are plenty of reforms the next government could do to jump start job creation. And a good job, after all, is the best form of inclusion. There is much to be done.
A new government must also learn from the past. Any genuine reform programme will be too vast, and requires too much from the states, to be run entirely from the Prime Minister’s Office. A collegial empowered Cabinet will be more likely to push a broad range of reforms and will avoid the policy mistakes that arise when too few are involved in decision making. States will also have to become partners in reform through genuine cooperative federalism.
We also need to respect resource constraints. The portfolio of government schemes has to be rationalised so that the budget is fiscally sound, even while it targets genuine needs more efficiently.
Lastly, any sustainable growth path will require social calm – any party that explicitly demonises a large group of citizens ensures we will neither have growth nor national security. There is only one objective as we go towards elections – sustainable, job-creating, economic growth. more  

View all 25 comments Below 25 comments
Have we ever discussed what is the contribution of the citizens to over come many of the problems.Over population has to be controlled.Efficiency level of individual has to rise. Dadagiri of trade unions has to be curtailed to a reasonable level.Unions should not protect inefficient workers and out put has to increase if you want to compete in international market.Opposition for opposition sake must stop by the non ruling parties.
Election process need a total relook,right from candidates qualification,age,criminal record etc.
Law and order has to improve.All vacancies in Judiciary must be filled in advance.Pendency of cases have to come down,and if for this more courts are required to be opened it should be opened. more  
Prime issues of Population Control, Self Employment through Nationalized Banks, One Job for One Family of Indira Gandhi, EX. PM were set aside by the same Congrewss Party, and, Constitutionally mandated Education was also awarded to Private Sector without Constitutional Controls setting aside the issue of Compulsory Free and Education in the Country after the death of Ex PM Rajeev Gandhi again by the same Congress Party which was brought to less than minimum in 2014 Elections.
But, the same Congress in support of its allies now bagging some States and Regional Parties TO BE AWAY FROM CORRUPTION CONTROL MANDATES OF BJP LEAD NDA.
Citizen awareness is a must and the Retired Bureaucrats who were befitted are to now act for Constitutionally Justified Rule in the Country sworningin National Interest SINCE STILL 65 % CITIZEN ARE SET UNEDUCATED AND INCAPABLE. more  
There should be multilevel specialisation in every field. Foe example every body need not be an engineer. He can be an diploma holder and work as foreman, and ITI certified tradesman. One can always improve upon his qualification while working in industry and go for higher post. Let thre be seats for various type of education based on demand from industry.
At present there are lacs of engineers but very less are employable due to low standard of education in thousands of engineering colleges aiming at making money only. more  
Govt. have been moving precisely in the right direction. So much opportunities have been created that soon there shall be shortage of working hands. more  
Neglected Education, Employability the sources of Economy; Self Earning Facilities; Industry,Infra, Investment;are now in needed Reforms. Controlling abnormal increase of Population SHALL BE TARGETED HENCEFORTH. more  
Distributing doles free should be discouraged. Such practices even though may help getting votes but ruin the the economy in the long run. Imagine if 5 crore of people get Rs. 6000/- a month free without doing any work, why should any one try to get a job at all? The payment should be in return of some work like in MNGRES. more  
A multi pronged approach is needed. 1.An increase in focus/funding of vocational courses is urgently required. 2. Revamp of professional courses to make the graduates industry friendly/employable is required. 3. Presently, lack of jobs forces the graduates into higher education , aided by the fact that such tertiary education is highly subsidized by the nation. 4. A greater interaction between academia and industry may encourage students to venture out on their own, rather than keep looking for jobs, either government or otherwise.
Col (Dr) A P Gupta (Retd) more  
Campaigns on Skills, Employability, Industry and Infrastructure of BJP is only remedy. more  
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