Prominent investor and author Ruchir Sharma has identified underemployment and economic disparities as key factors influencing the outcome of the 2024 Lok Sabha elections, where the BJP was denied a Lok Sabha majority but managed to form the government with the help of NDA allies.

In an exclusive interview with News18, Sharma discussed the growing economic challenges faced by India, particularly in job creation and the manufacturing sector.

Reflecting on the election results, Sharma observed, “There’s a need really to create employment. If you go out to smaller towns, there are lots of people who have smartphones, but who don't have any discernible jobs. That showed up in the election results, at least to some extent.”

Sharma pointed the issue of underemployment, noting that while India is experiencing a stock market boom, it primarily benefits a limited segment of the population. “The stock market boom is affecting maybe 20 million to 30 million people, but 500 million to 600 million people are not impacted by it,” Sharma said.

Sharma stressed the need for India to focus on manufacturing as a key driver of economic growth, despite the challenges posed by deglobalisation.

He called for a renewed emphasis on manufacturing, describing it as a critical component for broader economic inclusion.

“Manufacturing is still the traditional old way to create employment. The path is more limited due to deglobalisation, but why should manufacturing as a share of our economy still remain at its current level? We can do a lot more,” he asserted. He criticized the difficulties entrepreneurs face in doing business in India and called for a stronger focus on improving the ecosystem for manufacturing.

Drawing comparisons with other countries, Sharma pointed out, “India’s FDI as a percentage of GDP is even below 1%, while China and Vietnam are getting 3% to 4%. There’s so much more that we can do.”

He urged the government to avoid complacency and continue pushing for economic reforms.

He also advocated for a shift towards competitive federalism, urging the central government to empower state governments to take on a larger role in economic development.

“We are a truly federal system, and there’s a lot that state governments can do. I wish the government would think about how to empower the states to do much more, rather than this sort of friction that always seems to emerge between the center and the states,” Sharma said.

He suggested that Prime Minister Modi draw on his experience as chief minister of Gujarat, where he often felt constrained by centralization, to foster a more competitive and empowered federal structure.