Arvind Panagariya states India grapples with under-employment, not unemployment

 

Arvind Panagariya, former Chairman of NITI Aayog and current Chairman of the 16th Finance Commission, provided insightful commentary on India’s labor market dynamics during a session at the ABP Network’s ‘Ideas of India Summit 3.0’. He articulated a nuanced perspective, highlighting that while “unemployment” may not be the primary concern, the pervasive issue of “under-employment” significantly stifles productivity. Panagariya’s remarks shed light on the complexities and challenges facing India’s workforce.

Panagariya explored the anomalies in capital allocation across different sectors of the Indian economy. He emphasized India’s status as a labor-abundant but capital-scarce country, where capital is too concentrated in select capital-intensive industries while sectors like agriculture and small businesses suffer from a lack of investment. This analysis underscored the pressing need for targeting labor reforms aimed at enhancing productivity and efficiency across all divisions of the economy.

A staunch advocate for labor reforms, Panagariya pushed for revisiting and reworking India’s existing labor laws by reducing protection levels. He advocated aligning India’s labor controls with global standards to strengthen growth and generate more employment opportunities. Panagariya’s support highlighted the essential role of regulatory changes in fostering an enabling environment for financial progress and job creation.

Despite the significant challenges facing India’s labor market, Panagariya expressed unabated optimism about the country’s economic prospects. Citing past economic reforms and positive trends, he painted an encouraging picture of India’s future as a powerful and dynamic global economy. His positive outlook served as a beacon of hope amidst the complexities and uncertainties of India’s economic landscape.