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April 18, 2017

“Skill Gap Is One Of The Biggest Challenges”

India is described as a bright spot in the global landscape. Then why aren’t we creating enough jobs?

Abheek Barua, Chief Economist at HDFC Bank spoke to BW Businessworld's Himani Chandna in an exclusive conversation

It is quite visible that we are not adding enough jobs in the organised sector. We have entered the critical phase as we did not pay enough attention to the manufacturing sector at the right time. We can foresee a lot of challenges coming up in the job market as the global economy is already in the doldrums. Today, manufacturing is all about automation, artificial intelligence and cloud computing. Probably, we missed the bus.

Where did we go wrong or what have we over looked?
We have over looked the booming technological advancements. Reports predict that 70 per cent of jobs in India are at risk of being automated, where the work will move away from people to machines. China geared up timely on adopting technological changes. Other competitors in Asian peer group such as Thailand, Sri Lanka and Bangladesh have also taken lead over India. We certainly missed the bus which would have helped us to change gear and shift our focus on services sector and technological advancements, years ago.

Despite the Prime Minister’s ‘Make in India’ push to increase domestic manufacturing, job creation in the country’s $2 trillion economy is lagging… Then, there exists the problem of skill gap as well.

The ‘Make in India’ initiative is commendable. But due to changing technologies, requirement of automotive technology, the projects will move to China along with job creation prospects. I agree that skill gap is again one of the biggest challenge for the Indian economy.

Do you think policy changes such as introduction of Goods and Services Taxes (GST), Bankruptcy Code would help the job market revive?
The government is trying to make the business environment easy to attract foreign investments. But there will be no surprising impact on the job market, nothing immediately at least.

IT services has remained one of the largest job creators in the services sector. But it is also slowing down. What should we expect in the services sector?
The concerns over H1B visa were already hovering. Now, the election of Donald Trump as the president of United States will add to the problem. IT companies may suffer damage from the echoing trend of protectionism across the globe. For other services sectors such as banking, one of the modest sector, the back-end operations are now being handled by machines and cloud techniques. The conventional ways of doing work are now getting obsolete despite government’s several efforts. Hence, services sector is also not dependable.

What will be the role of start-ups in job creation?
To an extent, we can hope to create some jobs under this sector, though they are small job creators... Start-ups occupy miniscule segment of the Indian labour force participation...

Finally, what are the solutions?
The only solution is to create low-end services in sectors including construction, infrastructure, agriculture, tourism and hospitality. Investments must be made in sectors which are highly labour intensive. Moreover, start-ups should be encouraged... Creation of companies like Uber, an asset less model which do not require heavy capital investments but create thousands of jobs, is something we need at this hour.

This article was published in BW Businessworld issue dated 'April 15, 2017' with cover story titled 'Bharat To Power India’s Growth' 
Sources @
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