Need to make sure economic growth benefit 'is shared'; unemployment a crisis: D Subbarao

Former RBI Governor D Subbarao (Image: Reuters)

Former RBI Governor D Subbarao on Thursday stressed on the need to accelerate India's economic growth rate and make sure that this benefit of growth is shared, even as he said that unemployment has taken a form of "crisis" in the country.

Addressing the annual session of industry body PHDCCI, Subbarao further said the organised sector is shedding jobs and the labour force is moving from high productive sector to the unorganised sector.

"We need to accelerate the economic growth rate and make sure the benefit of growth is shared," he said.

According to Subbarao, faster growth is necessary but at the same time it is not sufficient, and there is a need to address the issue of rising inequality as well.

"Even as the economy is recovering, unemployment is going up... Today unemployment is not a problem, it is a crisis," he said.

Subbarao explained that economic growth comes from private consumption, private investment, government expenditure and net exports.

Observing that household incomes have gone down and households are uncertain about the future, so the country can't depend on consumption as a growth driver.

"So, we have to depend on government expenditure and net exports...We have to fire all cylinders," he said.

Subbarao pointed out that although inequality has grown, profits of corporates have also increased.

"Large corporations' market share has increased at the cost of smaller companies. This is an evidence of growing inequality," he said.

According to the ex-central bank governor, exports are expanding, and now India might have room for emergency expenditure.

Also speaking at the event, principal economic adviser Sanjeev Sanyal said last 18 months have been a difficult time for the world.

"We ramped up capital expenditure after we got hit by the second COVID-19 wave," he said, adding that the impact of the second wave on the Indian economy was much less than the first wave.