This is not jobless growth, says Arvind Panagariya

He adds, 'when 7-8% growth happens, it cannot happen that the labour market is not benefiting'

NITI Aayog Vice-Chairman Arvind Panagariya on Thursday termed the claims that the economy was growing without adding jobs as a “little bit bogus”. “When 7-8 per cent growth happens, it cannot happen that the labour market is not benefiting,” Panagariya said at a discussion in the Reserve Bank of India (RBI) headquarters here. RBI Governor Urjit Patel and Vivek Dehejia, professor of economics at Carleton University, participated in the discussion.

“Are you saying that our productivity growth is so high that we are growing without the need for new jobs?” Panagariya asked as he highlighted various reforms measures the NITI Aayog had proposed to the government as part of a three-year agenda.

According to Panagariya, jobs were being created but there was no credible survey to capture the trend. “Our impression is that a job that can be done by a worker is done by three. We are highly underemployed, and the result is that all are being paid a low rate,” he said.

The discussion revolved around the immediate reforms that should be undertaken by the government to give the economy a boost. Panagariya cited China’s development more than once and surmised that India at the present juncture was where China was 15 years ago and measures should be taken so that India could develop as fast as China did over these years. One way of doing that was by opening coastal zones to global investors, much like China had opened up its Guangdong Province, making Shenzhen a hub for global brands. 

Automation was not to be feared and it was not going to take away jobs in the next 15 years, Panagariya said.

But some issues need to be sorted out, like housing in urban areas, rent and how to house the migration population; labour laws; land acquisition; farm reforms and pricing issues for farmers. Panagariya argued that migration should not be discouraged but better housing should be provided.

Patel raised the issue of urban transportation, terming the state of affairs a “nightmare” for urban commuters. Long hours of commuting also reduced productivity, the governor said.

Panagariya had high praise for Patel after the central bank moved decisively to resolve the bad debt problem in Indian banks. “We have been fighting this battle for 12 years and a serious attempt was made after a long time. Governor Patel has taken the issue head on,” Panagariya said. 

Later speaking on the sidelines of the event, Panagariya said consolidation in Indian banking should happen as there was a shortage of talent in banks. “First we need a little bit of this cleaning up and then we should consolidate,” he told reporters. He also defended the government’s decision to empower the RBI for NPA resolution. “It is an extraordinary thing that the government has done, but this was also an extraordinary situation. It is not something you want to do as a matter of routine,” Panagariya said, adding the liquidation process would happen in a time-bound manner. 

“The emphasis for a while was on identifying these assets. But we really did not address the problem. This is the first serious effort and I feel optimistic that we will see resolution,” he said.