The big test for Nirmala Sitharaman, who has retained the finance ministry in the third term of Prime Minister Narendra Modi, will be the upcoming budget, where she has to lay the roadmap for the next year, Finance Commission chairman Dr Arvind Panagriya has said. He also disagreed with the view that there is a need for job creation, arguing that the capital in the market is enough for jobs, but they are tied up in sectors that are not labor intensive. What is needed, he said, is to reassign the capital, so it generates more jobs.
“You have got machinery. You got pharmaceuticals. You got petroleum refining. These are absorbers of capital, but they don’t absorb enough workers,” Dr Panagariya told NDTV in an exclusive interview.
Job creation, he said, has to do is with the composition of the industry, particularly manufacturing. “I think this is where you create good jobs and perhaps where the focus could shift a bit more than has been the case so far,” he said.
“So some industrial structure has to move a little bit more towards industries that employ more workers per unit of capital. I think that’s our challenge,” he added.
Asked about the Opposition allegation that the government has been unable to generate enough jobs and that, in turn, has cost them electorally, he said the country’s problem is not unemployment.
The unemployment figures, he said, have been consistently dropping. “Our problem is the productivity, the labour productivity per worker, has been low. That is a long-term problem,” he said, tagging it “under-employment” — meaning a job that can be done by one worker, is being done by two or three.
As for Ms Sitharaman, the upcoming budget will be a test for her, he said.
This budget, he said, is not just finance but a “statement of policy”. “She has to bring together various constituencies on board and show the roadmap for economic policy, since this is going to be a foundational budget,” he added.
