‘Labour market reforms and exchange rate management will spur job creation’

MUMBAI: Labour market reforms and exchange rate management will help India achieve labour-intensive growth (read job creation), said Prof Vijay Joshi, Emeritus Fellow, Merton College, Oxford.

“India has a decade or a decade and a half before this window (labour intensive jobs) is closed by automation,” warned Joshi, a former special advisor to the Reserve Bank of India.

He added the government and RBI should lean less towards liberalisation of debt inflows and ‘hot money’ and more towards maintaining a stable and competitive real exchange rate. Delivering the 15th LK Jha Memorial Lecture titled ‘India’s Economic Reforms: Reflections on the Unfinished Agenda,’ here on Monday, he spent considerable time talking about employment. “India is not Indiana Jones and cannot become a high-skilled economy with one giant leap. To ask for a swift short-cut to hi-tech jobs for most workers is to ask for the moon,” he said.

Going by conservative estimates, half of India’s labour force 10 years from now will have completed secondary education or less; and one-third of the labour force will have completed only primary education or less. According to Joshi, there are five broad areas where radical reforms are needed -- state ownership, jobs, fiscal adjustments, education and state capacity.

‘Repeal Bank Nationalisation Act’

Batting for bringing state-run banks under the Companies Act and repealing the Bank Nationalisation Act, Joshi said, “This would give the government the flexibility to reduce ownership to any extent it chooses.” To privatise banks, the government has to reduce its stake to 25 per cent or even lower, but as experience shows, private banks too can become reckless and delinquent, he observed.