Page 13 - Issue 01

39% in 2011-12 to 31.7% in 2018-19 has to be improved. Investment in infrastructure including construction
can create employment. In the recent budget, the central government has rightly focused on capital
expenditure for infrastructure. There are eight challenges in employment: (a) creating productive jobs for 7
to 8 million per year; (b) correcting the mismatch between demand and supply of labour: Only 2.3% of
India’s workforce has formal skill training compared to 96% in South Korea, 80% in Japan, and 52% in USA;

(c) Structural change challenge: Manufacturing should be the engine of growth. Here labour intensive
exports are important. Manufacturing and services are complementary; (d) focusing on MSME and informal
sector including rights of migrants; (e) Getting ready for automation and technology revolution; (f) Social
security and decent working conditions for all; (g) raising real wages of rural and urban workers and
guaranteeing minimum wages.

Second one is creating equality of opportunity by improving human development. Increasing public

expenditure on health and education is another form of redistributive measure. Covid-19 has given us
several lessons on health sector. Public expenditure on health is only 1.5 per cent of GDP. Apart from
spending on vaccine and other related measures, we need to move towards universal health care and spend
2 to 3 per cent of GDP on health. Education and health achievements are essential for reducing inequality of
opportunities. Great quality dichotomy exists in both these sectors. There are islands of excellence that can

compete internationally in education while vast majority of them churn masses of children with poor
learning achievement. We also have the experience of digital gap in education during the pandemic. One has
to fix this dichotomy in health and education.

The third one is providing quasi universal basic income and other safety nets. For example, Dr. Rangarajan
and myself suggested three proposals on minimum income for the poor and vulnerable in the post-
pandemic period. These are: (a) cash transfers to all women above the age of 20 years; (b) expanding the
number of days provided under MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act)

and (c) National employment guarantee scheme for urban areas. In all these proposals, there is no problem
of identification. A combination of cash transfers and an expanded guarantee scheme can provide income
support to the needy.
Apart from the above, increasing farmers’ income particularly small and marginal farmers is needed for
reducing inequalities and creating demand. Farmer producer organisations should be strengthened. States

have to be given more role in agri marketing reforms. Terms of trade for agriculture has to be improved.
Enhancing tax and non-tax revenues of the government is needed to spend on the above priorities. The
tax/GDP ratio has to be raised with a wider tax base. Richer sections have to pay more taxes. Similarly, the
inequalities between Centre and states should be reduced in finances. State budgets must be strengthened
to improve capital expenditures on physical infrastructure and spending on health, education and social
safety nets. Apart from economic factors, non-economic factors like deepening democracy, decentralization
can help in reducing inequalities. Unequal distribution of development is rooted in inequalities of political,

social and economic power. We have to find opportunities and spaces where the power can be challenged
and redistributed. In the post-covid world, addressing inequality is important for higher and sustainable
economic growth and well-being of the population.

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