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Published: February 26, 2024
Updated: February 26, 2024

NITI Aayog Chairman shares insights Addressing Under-Employment in India Through Reforms

Identifying the Issue

Arvind Panagariya, chairman of the 16th Finance Commission and former NITI Aayog Chairman, emphasized the pressing challenge of under-employment in India, highlighting the need for structural reforms to address this issue. Speaking at the 'Ideas of India Summit 3.0,' Panagariya underscored that while unemployment remains a concern, under-employment and low productivity pose significant hurdles to the country's economic growth.

Understanding the Dynamics

In his address, Panagariya outlined the structural imbalances within the Indian economy, characterizing it as labour-abundant but capital-scarce. He noted the concentration of capital in select sectors, resulting in a scenario where capital-intensive industries operate with minimal labour while the majority of workers are employed in agriculture and micro and small enterprises, where capital investment is limited. This imbalance translates into low productivity levels across various sectors.

The Need for Reforms

Panagariya stressed the urgency of implementing labour and trade reforms to address these structural challenges. He highlighted the need to revise labour laws and reduce protectionist measures to foster a more conducive environment for job creation and economic growth. Despite the inherent complexities of the democratic reform process in India, Panagariya expressed optimism regarding the government's commitment to enacting necessary reforms.

Optimism for the Future

While acknowledging the existing challenges, Panagariya expressed confidence in India's ability to overcome them in the coming decade. He cited the country's track record of sustained economic growth since the liberalization reforms of 1991, emphasizing the favourable conditions for continued progress. Panagariya underscored India's demographic dividend as a key advantage, highlighting the young and growing population as a potential catalyst for future economic development.

Panagariya's insights shed light on the critical importance of addressing under-employment through targeted reforms. By prioritizing labour and trade policy revisions and leveraging India's demographic dividend, the country can unlock its full economic potential and emerge as a global powerhouse in the years to come. With concerted efforts and strategic reforms, India is poised to navigate the challenges of under-employment and chart a path toward sustained growth and prosperity.