Narendra Modi govt needs targeted policy actions to address unemployment problem: India Rating’s Devendra Pant

Narendra Modi-government needs to introduce targeted policy interventions to address the problem of rising unemployment, which is a serious concern for the Indian economy at this point, said Devendra Pant, chief economist at India Ratings and research Ltd.

“Right now, unemployment is a serious problem. The problem is worsened with mechanisation taking away lot of jobs from the construction sector. What you need is targeted policy actions,” said Pant speaking at the Firstpost State of the Economy Dialogues.

Lack of jobs has been a worrying factor for the Modi-government since it took over at the centre in May, 2014. This is despite its various schemes such as Make in India to promote local manufacturing activities. The problem worsened late last year post demonetisation when cash-intensive informal sector was hit.

According to Pant, two other critical problems Indian economy is facing at this juncture are declining contribution of house hold investments and private investments as a percentage of GDP.

On the positive side, with structural reforms such as GST (Goods and Services Tax) happening in the economy and aided by the promised Rs 9 lakh crore economic stimulus package, the growth may gradually recover over several years, Pant said.

According to Pant, demonetisation was intended to formalise the economy but faulty execution resulted in prolonged pain. Tackling black money through note ban wasn’t a good idea in the first place, Pant said, primarily because the portion of black money in cash wasn’t much in the economy.