Underemployment biggest economic challenge: Arvind Panagariya

NITI Aayog vice chairman Arvind Panagariya said underemployment is the probably the biggest economic challenge the country faces and it is time we move our massive workforce out of agriculture into industry and services.

“Underemployment is probably the biggest economic challenge we face,” Panagariya said while addressing day-long conference of chief secretaries and other top officials of all states and union territories on Monday.

“We also need transition of the workforce out of agriculture into industry and services,” he said, adding that at the current productivity levels in each sector, moving one percentage-point workers out of agriculture into industry can increase the GDP by 1.5%.

According to Panagariya, raising the GDP is the only practical option as no major success in poverty alleviation is likely without rapid economic growth. “If we want to increase the total (public plus private) expenditures on education, health and infrastructure, we have only two options: we either cut expenditure on something else or increase the GDP. Unfortunately, our ability to cut the expenditures on items other than education, health and infrastructure is extremely limited. Therefore, raising the GDP is the only practical option,” he said.

According to the Sixth Economic Census, only 2.8 crore out of a total of 47 crore workers were employed in enterprises with 10 or more workers. This means as many as 44.2 crore workers or 91.2% of the total were employed in agriculture or enterprises with 9 or fewer workers. Alternatively, only 1.37% of a total of 5.85 crore establishments employed 10 or more workers.

Panagariya is of the view that Indian enterprises are excessively small and they have remained so in the lack of conducive policy environment. “Raising productivity requires creating a policy environment that will help our enterprises grow larger,” Panagariya said.