'We Need to Create an Environment Where Anybody can Flourish'

Former RBI governor, Raghuram Rajan, tells Parth Singh and Neeraj Thakur his views on jobless growth, PLIS and promoting MSMEs. Edited excerpts

- Parth Singh and Neeraj Thakur

This Budget focused on employment. Do you think it is a political compulsion or an inner awakening for the Centre?

It is difficult to delve into the finance minister's mind and understand the intent behind recent decisions. However, what is clear from the recent election is the widespread concern about jobs. This is evident in various data points, including the millions of applicants for public sector jobs.

Some economists point out that we are likely underperforming in job creation by a couple of million jobs annually compared to our own past performance. Even then, we were already falling short, producing about 2-3mn fewer jobs than needed for the 8-10mn individuals entering the labour force each year. This is extremely concerning; as it suggests that we are not fully capitalising on this period of demographic opportunity.

You have been critical of production-linked incentive schemes. How do you view the new employment-linked incentive schemes?

There is no silver bullet. We need to work on multiple fronts and this effort must span across sectors. Some people mistakenly think I am against manufacturing. We need all the manufacturing jobs we can get, across the spectrum-whether low-skilled, medium-skilled or high-skilled.

However, as a relatively poor country with limited resources, we must decide where to allocate our funds to achieve our objectives. For instance, we need to ask ourselves whether it is worth spending Rs 75,000 crore on incentives for the chip industry, which will employ very few people and require significant subsidies to be globally competitive.