Days after BJP union minister Nithin Gadkari raised alarm over economic slowdown, the International Monetary Fund (IMF) has said that India’s high growth rate didn’t create did not create jobs in the formal and labour market. The IMF report said, “recent labour market data suggests that unemployment is high while labour force participation has decreased, particularly for females.”
“Without more inclusive and sustainable growth, India’s potential demographic dividend over the next few decades, from its young and rapidly-growing labour force, could be wasted,” warned the report. Ranil Salgado, the IMF Mission Chief for India said, “abrupt reduction in non-bank financial companies’ (NBFC) credit expansion and the associated broad-based tightening of credit conditions” and some issues with implementing “important and appropriate structural reforms, such as the nation-wide goods and services tax (GST).”
“Over the medium term, growth is projected to gradually rise to its medium-term potential of 7.3 per cent” the IMF report stated. “This is expected to be supported by the lagged effects of monetary policy easing, recent measures to facilitate monetary policy transmission and address corporate and environmental regulatory uncertainty, and government programs to support rural consumption being rolled out,” the report said.
“Credit growth could also remain subdued, as there is a perception of increased risk aversion among banks and implementation of the recently announced PSB (public sector bank) consolidation could divert focus and weigh on near-term credit growth,” the report added.
