IT job losses overly pessimistic; start-ups compensate with new jobs: Urjit Patel

The central bank even issued a dissent note to the public on the government’s proposal to set up a Payments Regulatory Board. (Image: Reuters)

Despite pressure in the IT (information technology) sector, start-ups are creating more jobs. The pessimism regarding job losses is a judgment too soon, RBI governor Urjit Patel said on Thursday.

“While there could be pressure on employment in some of the IT sectors, it is not necessarily in terms of literally a job destruction, but may be the growth rate is affected...The number of start ups in that same space is almost compensating for most of this,” Patel said at a panel organised by the Indian Merchants’ Chamber (IMC) on Banking and Financial services in Mumbai.

Patel further said that when you talk to companies, they hardly complain.

"I rarely hear about jobs destruction. The sector has always had two-way movement. It is a high employment turnover sector. I think we don't have to be overly pessimistic at this stage… I'm not overly pessimistic and certainly would not make a judgment on it now, it is too early to tell," he added.

Talking about fintech (financial technology) at the same panel, he said with the emergence of technology-enabled innovation in financial services there will both opportunities and risks to financial sector stability.

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He cautioned that these needs to be addressed by policy makers, regulators and supervisors, as many innovations have not been tested through a full financial cycle.

India’s fintech industry has almost tripled its size since 2013 and the value of transactions has touched USD 30 billion already. Here, Patel asked to maintain caution of the space that the world is yet to recover even from the 2008-09 global financial crisis.

Meanwhile, the RBI itself is going more digital. The central bank has taken several steps in the sector such as the licencing payment banks, Bharat Bill Payment System and launch of UPI (Unified Payment Interface), IMPS (Immediate Payment Service), among others to facilitate innovations, payment systems and digital banking.

The banking regulator has also issued a discussion paper for peer-to-peer lending companies and will soon issue guidelines on it.

"We had to wait for one or two clearances in this area before we move forward and we have those clearances now," Patel said.

He also said enough focus or publicity has not been given to IndiaStack - a set of APIs (application program interface) that allows governments, businesses, start-ups and developers to utilise a unique digital infrastructure to resolve problems towards presence-less, paperless, and cashless services delivery.

The UPI, Aadhaar authentication, Aadhaar e-KYC (know-your-customer) and digital locker among others are a part of IndiaStack.

"IndiaStack is a game-changer in our macro fundamentals as financialisation of our savings continues. The most important and durable implication of this is going to be an increase in financial savings compared to where we are now," he said.

IndiaStack can also help improve growth rates in the future and its full implication will come in short to medium-term, Patel said.