NEW DELHI: The solution to the job crisis boils down to capital investment, the economic survey has said, as evidence from across the globe suggests that capital and labour are complementary when high investment rate drives growth.
"The Chinese experience illustrates how a country with the highest investment rates also created the most jobs," the economic survey said.
"When examined in the full value chain, capital investment fosters job creation as capital goods production, research and development, and supply chains also generate jobs," it added.
The report further added that the unemployment rates decrease with the greater gross capital formation in East Asia and Pacific, which provides additional evidence that labour and investment complement each other.
To counter claims that investment displaces jobs, the survey cited Jeffrey Lin's paper which makes an argument that the coming of software and computers, while having replaced some white-collar tasks, have also generated new labour centric tasks related to software.
Investment, especially private investment, is the "key driver" that drives demand, creates capacity, increases labour productivity, introduces new technology, allows creative destruction, and generates jobs, the survey report said.
"While the claim is often made that investment displaces jobs, this remains true only when viewed within the silo of a specific activity," the report noted.
The unemployment rate in India stood at 6.1 per cent with 5.3 per cent in rural areas and 7.8 per cent in urban areas as per usual status. As per the Current Weekly Status (CWS), the unemployment rate was 8.9 per cent with 8.5 per cent in rural areas and 9.6 per cent in urban areas.