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Gap between education and skillset affecting employability: Bibek Debroy

Abhishek Law Kolkata | Updated on January 25, 2020 Published on January 24, 2020

Bibek Debroy, Chairman, Economic Advisory Council to the PM Debasish Bhaduri

There continues to be a mismatch between education and skillsets that the market needs, which affects employability.

According to Bibek Debroy, Chairman of the Economic Advisory Council to the Prime Minister, employment is “more of a skills issue”. Similarly, the informal system in which labour supply and demand are matched — that is, through labour contractors — also does not do justice to skill-sets of people.

Employment numbers

“You are passing out from an educational institution, your expectation of the job is ₹25,000; but the market is prepared to give you ₹15,000. So the serious issue is a lack of match between education and skills that the market values,” he said on the sidelines of a literary meet organised here in the city.

According to him, one “will not get reliable information” on employment numbers primarily because most jobs “a substantial part”, in the country are generated in the informal sector. Reliable data on employment can be obtained only when the household surveys are through.

“The household survey data is still awaited. Until then, everyone who is hazarding a guess about employment is hazarding a guess in a complete vacuum,” Debroy said adding that for the first time in 2019 the “absolute number of under-15 population has dropped”.

“It is of course part of the demographic transition. But it also means that when we look at 12 million people wanting jobs, it is probably not true,” he added.

Debroy pointed out that India can end-up with a real GDP growth of 5 per cent during this fiscal, excluding the inflation rate.

GDP & taxation

Next year, the GDP growth rate could be anything between 6 and 6.5 per cent, while pointing out that Indian exports are witnessing increased protectionism and after the collapse of the WTO, the contribution of exports to GDP, in a large way, may not be possible. Recently, the IMF pegged India's GDP growth at 4.8 per cent for 2019-20.

On the taxation regime, Debroy maintained that the country is moving towards a stable direct tax regime without any exemptions.

“The Goods and Services Tax (GST) is still a work-in-progress. GST was supposed to be revenue neutral. But the government has lost revenue post-GST implementation which is not tenable,” he pointed out. The average tax rate post-GST stands at 11.5 per cent, against 17 per cent pre-GST.

According to him, there will be a time “when both direct tax and GST rates are stabilised”. Similarly, expenditures — across State and Union Budgets — too will stabilise and converge. At that point, there will be no need to present a Budget in Parliament.

“Increasingly we are moving towards a situation of stability where there will be no changes (in taxes) from year to year. I have not said, we have moved towards it (such stability). The Budget is about taxes and expenditure,” the economist said.

“The 15th Finance Commision will submit its report and we will also have some kind of consensus about what should be the stable scheme of public expenditure. Some of it will be passed on to the divisible pool. Some will be passed on to the States which is where the discussion happens on the State Budget and State Finance Commissions.

“So far, as the Union Budget is concerned that will also stabilise. Consequently there will be a time, not in the too distant future, when the Finance Minister will stand up and say this is the last Union Budget,” Debroy added.

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Published on January 24, 2020
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