Chief economic advisor Krishnamurthy Subramanian said on Monday that the government is the converting Covid crisis into an opportunity to have labour-intensive economic growth, which is a shift from jobless growth seen in the past.
He added that reforms undertaken by the government would benefit the silent majority but the status-quoist minority is more vocal.
Addressing a Confederation of Indian Industry (CII) event, Subramanian said,"If you see agricultural changes, MSME definitional changes, production-linked intensive (PLI) scheme, labour reforms, all these together are an attempt to actually change the macro economic configuration of the economy towards those sectors which are more employment intensive, especially agriculture and manufacturing."
This is important because sustained growth can only happen through robust job creation in the economy, not through job-less growth.
"Jobless growth episodes actually peter out, while growth accompanied by job creation is what actually puts money in the hands of people, creates demand for product and services and thereby creates sustained growth," he emphasised.
Lot of economic growth has not been that labour-intensive in the last 50 years, he added.
"That is actually something we need to change for sustained growth to happen by creating demand. If you look at countries that have grown at five per cent at least for a decade, what stood out was there was increase in wages, there was increase in employment and thereby disposable income was created in the hands of people, and that is how they sustained growth," he said.
He said labour along with other reforms would increase formalisation of the economy that will enable growth as well as build resilience.
"We don't want Covid to create any permanent impact on the economy. By converting crisis into opportunity, we want to push the economy," he said.
Subramanian said the Covid crisis was different from earlier crises. While earlier crises reflected overheating of the economy and hence high current account deficits and inflation, the current crisis is about underheating of the economy and hence there is current account surplus. The economy may have this surplus in 2020-21 even if the remaining three quarters do not repeat the $19.8 billion excess amount in current balance in the first quarter.
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