Modi-led NDA Govt must Tackle Unemployment Problem, Especially in Unorganised Sector: Rajiv Kumar

New Delhi: Prime Minister Narendra Modi led-NDA government in its third term must tackle the problem of unemployment in the country, especially in the unorganized sector and in small and medium enterprises, former NITI Aayog Vice Chairman Rajiv Kumar said on Monday. Kumar also emphasized that the government now must finalize the four labor codes as it has been delayed beyond expectations.

“We must recognize that post-COVID economic recovery has been a K-shaped recovery. I think the most important reform that the Modi government must take is one to tackle the unemployment problem, especially in the unorganized and the small and medium enterprises,” he told PTI in an interview.

According to a recent International Labour Organization (ILO) report, the share of unemployed youths in India’s total unemployed population was nearly 83 percent in 2022.

“Therefore the large corporations have done very well, and also those who are highly skilled have done well. But at the lower end, people are without jobs and firms are struggling to expand their capacity,” the eminent economist said.

According to Kumar, one of the two important things about generating employment is to further ease the conditions of work for small and medium enterprises. There is still a lot of regulatory and compliance burden that SMEs face. “So they have to be tackled along with the state governments,” he said.

On the four labor codes Kumar said “it has been a long time since they have been in the making, and I think they should be now finalized and made into statutes”.

Kumar also stressed on giving more attention on the skilling of youth, especially to apprenticeship development, saying schooling and the education system in India is lagging behind the demand.

“Our apprenticeship program needs a far bigger push than we have now and access to high-quality education should be ensured because ultimately, these are the factors that will determine the employability and employment generation potential for our economy,” he noted.

Modi was sworn in as Prime Minister on Sunday for a record-equalling third term. Modi will be heading a 72-member Union Council of Ministers putting emphasis on continuity, youth, and experience, while also rewarding partners in the BJP-led National Democratic Alliance (NDA) government.

Along with Modi, senior BJP leaders including Rajnath Singh, Amit Shah, Nitin Gadkari, Nirmala Sitharaman, and S Jaishankar, all ministers in the Modi 2.0 cabinet, took oath as cabinet ministers at the Rashtrapati Bhavan.

Responding to a question that the government’s disinvestment program may face a coalition hurdle, Kumar said disinvestment has already taken a backseat over the past five years.

He pointed out that targets of non-tax revenue and non-tax capital revenue have not been huge in the successive budgets in the last five years, except for one year when Air India was privatized.

“I am not sure at all that the coalition dharma will be the cause for pushing this (disinvestment) in the background,” Kumar argued.

The former NITI Aayog Vice Chairman emphasized that privatization and generating revenues from it to reduce India’s public debt-to-GDP burden is a necessary and important reform measure that should be taken.

“Also, to improve the efficiency of the public sector enterprises, especially the public sector banks, where I had advocated very strongly the privatisation of most public sector banks, except the State Bank of India,” he said.

On a question concerning the correlation between coalition governments and economic reforms, Kumar said the coalition governments have been far better at generating reforms.

He said that in a coalition government, one should not believe that there will not be any reforms and there will be only populism. “I think all the three parties (BJP, TDP, and JDU) who are coming together are pro-reform parties. And therefore, the pace reforms can and perhaps will continue, as in the last 10 years,” he said.

Recently, Moody’s Analytics has said reduced political stability and the need for consensus-building in a coalition government will likely slow decision-making and erode investors’ confidence in the near term.

In a post-election note, Moody’s Analytics said the Lok Sabha election results mean dynamics are about to change in Parliament, as coalition partners will gain influence and leverage in policy decisions, allowing for a more inclusive approach to governance.

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