Between 1992 and 2012, when both public and private sectors saw an inflow of $6 billion in FDI, only 2.5 million jobs were created.
Addressing delegates at CII Karnataka’s Annual Meet, economic analyst S Gurumurthy said that what is often considered as the golden period of Indian economy (2004-2010), with an almost 10 per cent average GDP growth, created just 27 lakh jobs in the organised and unorganised sector.
The economist also said that GDP numbers without employment have no meaning. “We have thus far produced fake growth and called it record growth,” he said.
He believes India needs a different kind of economic thinking.
We need economist who know the economic history of India, and these kind of thinkers are not present in the country, he said. He called on the CII to set up a think tank that will encourage and foster lateral thinking and disruption, and not be mere carbon copies of the west.
During the aforementioned period, ₹19 lakh crore was shifted from banks to the private sector, Gurumurthy said. He said the only reason India survived this period was because of 58 million non-forming business units that created 128 million jobs at an investment of ₹12 lakh crore, most of which came from non-banking institutions.
To address this issue, the PM felt the urgent need for a separate banking institution, with the Mudra initiative. However according to Gurumurthy, Mudra needs to be backed by law and a regulatory structure.
“The RBI is objecting to this as they don’t want another monetary mechanism in the country, which they feel will be a structural risk, which is chaotic economic thinking,” he said. Unless tertiary mechanism is promoted, India’s economy cannot truly grow, Gurumurthy added.