The Narendra Modi-led NDA government, commencing its third term, faces a significant challenge in addressing the country’s unemployment issues, particularly in the unorganised sector and among small and medium enterprises (SMEs). Rajiv Kumar, former Vice Chairman of NITI Aayog, emphasized this in an interview on Monday, also urging the swift finalization of the four pending labour codes.
"We must recognize that post-COVID economic recovery has been a K-shaped recovery," Kumar told PTI. "The most important reforms the Modi government must undertake involve tackling unemployment, especially in the unorganised sector and SMEs."
A recent International Labour Organization (ILO) report highlighted that nearly 83% of India's unemployed population in 2022 were youths, underscoring the urgency of Kumar’s call. He pointed out the disparity in recovery, noting that while large corporations and highly skilled individuals have prospered, many at the lower end remain jobless and firms are struggling to expand.
Kumar suggested easing the regulatory and compliance burdens on SMEs as a crucial step. "There is still a lot of regulatory and compliance burden that SMEs face. This must be addressed in coordination with state governments," he stated.
He also stressed the need to finalize the four labour codes, which have been delayed longer than anticipated. "It has been a long time since they have been in the making, and they should now be finalized and made into statutes," Kumar urged.
Another critical area Kumar identified was youth skilling and apprenticeship development, noting the lag in India's education system relative to demand. "Our apprenticeship program needs a far bigger push, and access to high-quality education should be ensured. These factors will ultimately determine the employability and employment generation potential of our economy," he added.
Addressing concerns about the government's disinvestment program facing hurdles due to coalition politics, Kumar dismissed such fears. He noted that disinvestment had already been deprioritized in recent years, except for the privatization of Air India. "I am not sure at all that the coalition dharma will be the cause for pushing disinvestment into the background," Kumar said.
Contrary to concerns that coalition governments hinder economic reforms, Kumar argued that they have historically been more effective in generating reforms. "Being a coalition government does not mean there will be no reforms. All three parties (BJP, TDP, and JDU) are pro-reform, and the pace of reforms will continue, as in the last 10 years," he said.
Moody’s Analytics recently noted that reduced political stability and the need for consensus-building in a coalition government could slow decision-making and erode investor confidence.
However, it also suggested that a more inclusive approach to governance might emerge, with coalition partners gaining influence in policy decisions.
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