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Govt. can’t solve all social, economic problems such as unemployment: CEA

Asserting that it was incorrect to think that government intervention could solve every social and economic challenge, Chief Economic Advisor V. Anantha Nageswaran on Tuesday contended that a diagnosis was easier than the solution when it concerned problems like unemployment.

Speaking at the unveiling of the “India Employment Report 2024: Youth Employment, Education and Skills” co-authored by the International Labour Organisation and The Institute for Human Development (IHD), Mr. Nageswaran wondered what the government could do on the employment front “short of hiring more itself”. 

“In the normal world, it is the commercial sector who needs to do the hiring,” he pointed out, while listing out the facilitative actions taken by the government to spur job creation in recent years, such as the skill development efforts and the National Education Policy of 2020, which he stressed should not “become hostage to political considerations.”

The CEA also pointed to the corporate income tax breaks for salary payments as well as subsidies towards provident fund contributions and asserted, “Indeed, we can state very confidently now that the tax code no longer favours capital accumulation over employment generation.”

Citing the 1970s’ satirical film Mohammed bin Tughlaq written and directed by Cho Ramaswamy, the CEA said there is “an element of truth” in what the film’s protagonist, who becomes the fictional country’s Prime Minister and seeks to address problems like corruption, says about unemployment.

“For unemployment, he simply says, “Look, all I will do is I’ll keep talking on every dais and stage that we have to solve the unemployment problem, and that is my contribution to solving the unemployment problem. Because this is not something I can address.” 

Mr. Nageswaran also questioned whether governments worldwide were reducing the incentive to work through welfare policies intended to ‘ameliorate the negative consequences of unemployment’ that ended up disrupting the labour market for the worse.

“In every public policy intervention, there is always the law of unintended consequences… In general, humans change their lifestyles and habits only when doctors read the riot act on behalf of the human body. Does it not apply to our youth and others in respect of their willingness to work or efforts to equip themselves with skills and attitude towards work?” he commented.

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