New Delhi: Finance minister Arun Jaitley has said the highest priority for the government at this juncture is to create new jobs as millions of young people enter the workforce every year on account of favourable demographic changes.
Employment creation, a global slowdown in investments and the impact that the US Federal Reserve’s move to restore normal monetary conditions can have on emerging economies are three policy challenges, Jaitley said at a discussion of the International Monetary and Finance Committee (IMFC), the panel that advises IMF, a statement from finance ministry said on Sunday. The meeting took place in Washington on Saturday.
Monetary policy tightening in the US could cause capital outflows from emerging economies such as India and Brazil, affecting their current account deficit.
“India is currently one of the few large economies in the world in the virtuous phase of its demographic transition and the most important priority of the government is to find ways to provide employment to the 12 million young people entering the workforce annually,” the statement said citing Jaitley.
Jaitley also said at the discussions that finding ways to revive investment is critical to sustaining global growth, for which collective and co-ordinated action was needed. The minister also pointed out that cyber threats to the interconnected global financial system was another challenge to the global economy.
Job creation has become the focus for India’s policy makers as small businesses had to deal with demonetisation in last November and roll out of a goods and service tax (GST) from 1 July. While the high value currency ban impacted their liquidity, GST imposed a higher compliance burden.
Jaitley, who also attended the annual meeting of the World Bank during his current visit to the US, said the short-term adverse impact of GST and demonetisation are mostly overcome.
“Recent data in manufacturing sector indicate that India’s growth story is soon getting back to its normal course,” the finance ministry statement said quoting Jaitley. India’s industrial output rebounded strongly to a nine-month high of 4.3% in August as companies stepped up production ahead of the festival season, the Central Statistics Office (CSO) had said last Thursday.
The minister also stated that cash dealings in the economy had come down as a result of demonetisation.