Solving India’s Jobs Challenge
On Episode 347 of The Core Report, financial journalist Govindraj Ethiraj talks to Captain G R Gopinath, founder and CEO...25 July 2024 6:00 AM IST
On Episode 347 of The Core Report, financial journalist Govindraj Ethiraj talks to Captain G R Gopinath, founder and CEO of Deccan Aviation and now Deccan Charters.
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SHOW NOTES
(00:31) The Take
(03:43) Markets Look For Fresh Direction
(04:20) Jobs, the bottom-up question
NOTE: This transcript contains only the host's monologue and does not include any interviews or discussions that might be within the podcast. Please refer to the episode audio if you wish to quote the people interviewed. Email [email protected] for any queries.
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Good morning, it's Thursday, the 25th of July and this is Govindraj Ethiraj headquartered and broadcasting and streaming from Mumbai but right now in transit.
A quick reminder, I am travelling for a conference and thus will be intermittent or have short episodes for the next few days.
THE TAKE
The markets are still digesting the Union Budget. The markets wrongly expected that capital gains on sale of shares would be untouched or even reduced, yes some were even thinking that.
You have to see the world through a political lens, sometimes.
If their markets had priced in steady or lower taxes, then this is not good news. And the markets are currently and quite evidently not sure how to react.
Except to of course focus on the fundamentals, which is not a bad thing.
When sentiment and flows rather than fundamentals drive a good part of the markets, then these issues become important.
If you look back a few weeks, ministers in the previous Government and now the present were exhorting investors to invest in the markets.
The Core Report has been consistently pointing out that this is a wrong thing to do and that politicians should stay away from trying to talk up the markets.
Fast forward and a top revenue official of the Government said yesterday that only the rich majorly benefited from capital gains.
"Capital gains by no means is the preserve of the middle class, it is quite the opposite. The middle class is not the main earner of capital gains tax, it shows the rich piggybacking on the middle class claiming that it is a middle-class issue," the secretary added.
Which also brings out some more nuanced questions. Who were the ministers thinking of when they were talking up the markets ?
Short term investors or long term investors or investors in general.
I don’t disagree with what the FInance Secretary of the Government of India is saying and there is some merit in the Government encouraging longer term investments and discouraging shorter term investments.
Investors, many of whom are actually short term, don't care for the nuances.
And to that extent this is not the best constituency to talk up.
Having said that, the markets themselves have priced everything for now.
Moving on, there were several initiatives on jobs in the Union Budget.
Jobs of course is a massive problem and the solutions will be several over time and be the outcome of good policy and of course business leadership.
The more fundamental question to me of course is the disconnect between aspirations and the availability of jobs.
Private sector jobs are few and well paying at the median but do not offer long term security which the vast majority of job aspirants in India want. Hence they line up for Government jobs in the millions.
In any case, the private sector is the only driver for job expansion.
Columnist Ajay Shah in Business Standard says that we must reshape state power in ways that create conditions for private persons to want to invest in India. This is the path to growth, and has unlimited potential.
He also argues it is better to solve these disabilities at the root through policy analysis and reform, after which private entities (domestic or foreign, large or small) would re-evaluate the case for producing in India.
So while we have embarked on addressing the jobs issue, many of the solutions will lie in the plumbing of how business is done, which is bottom up rather than top down.
Overall, the Budget has been hailed for its fiscal prudence, reduced deficit targets and no big bang spending announcements which could have been there.
More with some fine print in the coming days.
Markets Look For Fresh Direction
The stock markets will now look for fresh direction.
Benchmark indices in the Indian stock markets witnessed another volatile session on Wednesday as investors assessed and reacted to the Budget 2024 proposals.
The BSE Sensex index, which fell to a low of 79,750 during the day, ended at 80,149, down 280 points or 0.35 per cent.
The Nifty50, meanwhile, hit an intraday low of 24,307 before settling at 24,414, down 66 points or 0.27 per cent.
Jobs, the bottom up question
The big question is jobs. How can we resolve this ? I tried to pose this as a bottom up question from an entrepreneur who has had his own shares of ups and downs.
I spoke with Captain G R Gopinath, founder and CEO of Deccan Aviation and now Deccan Charters.
Captain Gopinath, who calls himself a farmer, is based out of Bangalore.
I began by asking him why this was happening
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