‘Will Indians become rich before India grows old?’: Raghuram Rajan on the job scenario

Former Reserve Bank of India governor Raghuram Rajan posed a question in his discussion with CNN’s Fareed Zakaria on his show GPS on joblessness in the country: “Will Indians become rich before India grows old?”

Rajan was speaking to Zakaria on India’s unemployment figures, which Centre for Monitoring Indian Economy (CMIE) puts at 8.1 per cent for April 2024. Zakaria said that only 37.6 per cent of the working population is gainfully employed. 

“Even if India is the fastest growing economy in the G20, it is also the poorest country,” said the economist, also the coauthor of ‘Breaking the Mold: India’s Untraveled Path to Prosperity’. He said that India is currently getting the benefits of the population dividend. “Young people are coming into the labour force in massive quantities. If we could employ them, India would grow much faster,” said Rajan, giving examples of China and Korea in their strong growth periods.

Zakaria pointed out that China, Korea, and Taiwan were growing at 10 per cent when they were at the stage where India is, as compared to India’s 6.5 per cent growth. 

“Relative to the rich countries, we look really good. Also we have a large population, so we are overtaking countries in terms of overall GDP. We have just overtaken the UK, India is the fifth-largest economy. Soon, India will overtake stagnant Japan and Germany to become the third-largest economy. The real issue is: Can Indians become rich before India grows old?” said Rajan. He argued that the population dividend that India is reaping now won’t remain the same, and that fewer people will join the workforce. He pointed out that the Indian population would age. 

“By 2047-2050 we are going to start growing old. Are we going to be rich by then? Not at 6-6.5 per cent growth,” said Rajan. 

The economist, in a question on how much credit the Modi government deserves, acknowledged that they must be credited for many things like the infrastructure developments. “If you want roads to be built, railways to be built, that centralised coordination happens well with a more authoritarian government, which is what the Modi government is,” said Rajan, pointing that a freer environment is necessary for innovation, debate, and arguments. “You can’t suppress protests in universities…or independent media,” said Rajan, adding that if one is going on a new path, they should know where they are going wrong. 

Rajan said that the government needs to acknowledge the problem of unemployment. The ‘White Paper on The Indian Economy’ released in February 2024, does not mention the word ‘unemployment’, said the economist.

Responding to a question on issues of minorities and nationalism, Rajan said: “That’s a huge worry. No country has ever succeeded by treating a large part of its population as second-class citizens. They should get the sense of progress, that things are getting better. You cannot reverse the environment of equality that India has enjoyed since independence.” He said that some actions that certain BJP governments are taking are sending a very strong signal to Muslim as well as other minorities. 

Rajan said that the Constitution is something to be proud of and emerged out of certain frailties after partition. He said leaders are often heard saying they believe in the Constitution, but the fundamental part of the Constitution is equality. 

The immediate issue, said Rajan, for India was to create enough jobs, upskill people to make them employable, and enhance India’s women labour force participation. He also said India does not have a single university in the top 100. “But if you bring the diaspora together, we can populate many universities in India with professors of the highest calibre sitting across the world. Can we get a few of them back to give competition to the Oxfords and Harvards,” asked Rajan. 

He said that India always has a way of surprising, and that “again and again we would be surprised by the maturity of the Indian electorate”.