India Needs Urgent Reforms To Boost Job Creation, Says IMF’s Gopinath

India will need to implement additional reforms to sustain its economic growth and ensure sufficient job creation, according to Gita Gopinath, the IMF’s deputy managing director. Speaking at an event on Saturday, Gopinath highlighted the need for India to reduce import tariffs if it seeks to play a significant role in global supply chains.

She acknowledged that the government has made substantial progress in structural reforms over the years. However, in a global environment where trade integration is being questioned, Gopinath emphasised the importance of India remaining open to international trade.

India's GDP growth has averaged 6.6 per cent since the 2010s, but employment growth has lagged behind at under 2 per cent during the same period, Gopinath noted. She emphasised that compared to other G20 emerging market economies, India's growth has been less employment-driven and more reliant on capital investments.

Gopinath projected that India will need to create between 60 million to 148 million additional jobs by 2030. To achieve this, she urged the government to implement policies that encourage hiring rather than penalise firms for expanding their workforce. Additionally, she highlighted the importance of implementing the reforms proposed in the Labour Codes, suggesting that incentives for states could help drive these changes.

Addressing the issue of workforce quality and skill levels, Gopinath pointed out that the skill mismatch in India’s labor market has become a persistent challenge. She called for urgent investments in revamping the education system, stressing the need for both longer and better-quality education to address this issue.

While recognising India’s aspiration to achieve developed nation status, Gopinath cautioned that this goal requires ongoing, consistent efforts across multiple sectors. "Reaching developed country status is a tremendous aspiration, but it won't happen automatically—it demands broad-scale efforts across many areas."

India, with its impressive growth rate of 7 per cent, is currently the fastest-growing major economy in the world. Gopinath posed the critical question of how to sustain this momentum and accelerate it further to raise per capita incomes, ultimately moving closer to advanced economy status.