The global pandemic refuses to subside. India’s economy is crawling towards normalcy. Nobody knows what lies ahead. Job security is on top of the list for everyone who is working and who is looking for work. All of that has a lot of influence on your finances. A more straightforward way to look at the big picture is to read the commentary of the Reserve Bank of India (RBI).
However, a lot of times, you need to know the fine print. RBI governor Shaktikanta Das addressed members of the Confederation of Indian Industry (CII) last week. He highlighted five dynamic shifts in the Indian economy that could create new jobs.
Agriculture
The next wave of job creation could come from the agriculture sector. The total private investment in agriculture is expected to jump to Rs 139,424 crore by 2022-23 from Rs 61,000 crore in 2015-16.
The RBI governor cited the committee on the doubling of farmer income for the data. The government has made some enabling changes in laws to encourage private participation.
He explained that India’s foodgrains production is at a record high of 296 million tonnes with buffer stocks of cereals at 2.2 times the past average. That means there is adequate food for all in the country.
It also means India’s rural economy may make a robust contribution to overall growth. It may just surprise on the upside even in 2020-21 and save India from the blushes of economic contraction.
Energy production
India is now a power surplus country. It is generating more power than before and exporting surplus power to neighbouring countries. Renewable energy now has a 23.4 per cent share in overall energy production as of March 2020.
That is a jump from 11.8 per cent at the end of March 2015, the RBI governor explained. That is an opportunity to cut coal import bill and generate local jobs for new skills in the energy sector. His one statement though highlights the efficiency in the industry. “Closing the gap between the average cost of supply (ACS) and average revenue realised (ARR) will require speedier/accelerated DISCOM reforms (including privatisation and competition),” he said.
Power distribution is a state subject. There is a lot of politics as state governments provide subsidy to farmers and other groups within. Many state electricity boards are reeling in losses that are effectively borne by the taxpayer. That is perhaps a significant hurdle in job creation in the energy sector.
IT and start-ups
With $16bn invested in startups in 2019, they could further create jobs going forward. However, the RBI governor highlights challenges in the aftermath of COVID19 for startups. Risk aversion among investors does not help. However, Das said that a global technological churn was underway. Money was moving out of hardware and software systems and put in digital technologies and analytical capabilities.
“Fierce competition from other developing economies with the potential to provide cost-effective IT services is rapidly emerging as a challenge to India’s position as the leading outsourcing hub of the world,” he said. There are other issues like immigration policy in the US, data security and privacy policy that are influencing new businesses in the sector.
Global value chains
So far, India’s ranking in the global supply value chains was lower than in other countries in South East Asia. With the pandemic, there are opportunities for Indian businesses to participate in the worldwide supply chain mechanism. He suggests greater participation in global trade relations to allow foreign companies to include India among locations for factories. A World Bank study indicates that every 1 per cent increase in participation in global value chains enhances per capita income by more than 1 per cent.
Infrastructure
Despite rapid construction of metro rail, roads and other physical infrastructure, there are gaps. New ideas to connect the East to the West and the North to the South with expressways and high-speed rail corridors could have a force multiplier effect. According to the Niti Ayog, India would need $ 4.5 trillion or (Rs 350 lakh crore) up to 2030 to finance all infrastructure needs. Any progress on the ground to boost infrastructure could create new job opportunities.
(The author is editor-in-chief at www.moneyminute.in)