‘India’s main challenge will be finding jobs amid automation’:

‘India’s main challenge will be finding jobs amid automation’:

 Context:

India’s major challenge will be to find jobs for its working-age population, according to the chairman of U.K. based Institute for New Economic Thinkings, Lord Adair Tuner.

Introduction:

• India’s working age population is forecast to increase from about 740 million to 1.3 billion by 2050.
• Information, communications technology driving unequal world, Mr Tuner said.
• For emerging economies such as Africa, a very rapidly growing working population is a major challenge. India is in an intermediate position.

UN Labour report:

• According to the UN Labour report released recently, Job creation is not expected to pick up in 2017 and 2018 and unemployment in India is projected to increase from 17.7million in 2016 to 17.8 million in 2017 and 18 million next year.
• In percentage terms, unemployment rate will remain at 3.4% in 2017-18, according to the report.
• 2008 crisis:
• The former Chairman of the U.K.’s Financial Services Authority pointed out that at least five decades before the financial crisis of 2008, there had been a surge in private debt. It went from 50% of global gross domestic product in 1950 to 170% in 2007.
• Most of that debt came under the category of real estate-mortgage or commercial real estate.

Challenges:

• The challenge in this global economy is that the total amount of debt has not gone down.
• The total debt as a percentage of global GDP has gone up.
• Very low interest rates encourage people to create more debt which may create more problems in the future.
• India has a large concentration of bad debt.
• In India, the problem has been lending for large industrial class.
• The global economy is moderately in a good position for the next couple of years. But debt overhang is fundamentally not addressed.
• An increasing effect of information and communication technology on the automation of jobs.
• U.S and China:
• After 2008, the U.S. and some European countries saw a significant number of households and corporates having to deal with the situation and public debt in the U.S. and in China shot up.

Solutions:

• Allow public sector entry in areas like health, education, infrastructure etc.
• Capacity building towards maintaining information technology.