
Raghuram Rajan, the former Governor of the Reserve Bank of India, recently expressed his observation that a significant number of young Indians are choosing to go abroad to establish their businesses. He attributed this trend to the dissatisfaction felt by these individuals in India. According to Rajan, these young Indians possess a “Virat Kohli mentality,” a reference to the renowned Indian cricketer known for his global success. They seek opportunities in locations where they can easily access global markets.
Focus on Improving Human Capital and Skill Sets
Rajan emphasized the need for India to enhance its focus on improving human capital and developing the skill sets of its young population. He suggested that it is crucial to understand the factors that compel these aspiring entrepreneurs to set up their businesses outside of India. Rajan also shared his positive encounters with these entrepreneurs, highlighting their desire to make a meaningful impact on the world. However, he noted that many of them express dissatisfaction with staying in India.
The Challenge of Reaping the Benefits of the Demographic Dividend
While speaking at a conference on ‘Making India an Advanced Economy by 2047: What Will it Take’ at the George Washington University, Rajan addressed the issue of reaping the benefits of India’s demographic dividend. He stated that India is currently experiencing the demographic dividend, but the country is not fully capitalizing on its potential. Rajan compared India’s growth rate of around 6% to that of China and Korea during their demographic dividend phases, suggesting that India’s growth rate falls short. He also raised concerns about the lack of job opportunities for the young population, emphasizing the importance of creating employment prospects.
Unemployment
Raghuram Rajan highlighted the Indian economy’s growth but expressed concern over the employment situation, noting a surge in government job applications due to a lack of private sector opportunities. He emphasized nuanced job growth, with construction seeing increases due to infrastructure projects, yet other sectors like manufacturing facing challenges despite government efforts.
Unemployment has long been a critical issue in Indian elections and remains a top concern, with a recent survey showing 27% of voters ranking it as their primary worry. Rajan critiqued the government’s ten-year whitepaper for omitting ‘unemployment’, stressing the seriousness of the issue as reflected in the overwhelming demand for government jobs over private sector roles.
He cited government estimates putting unemployment at 5.4% in FY23 (up from 4.9% in FY14) and a private agency reporting over 8% in February 2024, cautioning that unemployment data, particularly from CMIE, is volatile and advocating for more reliable data sources like PLFS to inform policy decisions.