He said the country cannot afford to have 55 percent people in agriculture whose contribution to the national GDP is only 16 percent.
"Agriculture in India barely gives the agriculturists the subsistence. In fact people are already underemployed there," he said while inaugurating the Hyderabad campus of Symbiosis International University's (SIU) at Mamidpally near here.
"We the country cannot afford to have 55 percent people in agriculture whose contribution to the national GDP is only 16 percent or so. Therefore that creates inequality," he said.
The finance minister said that while India's aspiration was that manufacturing should be 25 percent of the economy, it was yet to reach there.
He noted India missed the first industrial revolution and also lost the opportunity when the "second and third industrial revolutions came, that is low cost manufacturing". He said China and other Asian economies benefited more than India.
"Now they say it is the fourth industrial revolution and it is India's opportunity to catch up. Hopefully we may but we are not sure," Jaitley added.
He said the hard reality was that India is a services hub and services contribute about 60 percent of the national GDP.
Jaitley, however, believes large population could be an advantage for India, if they are trained and converted as human resources.
"We have one of the largest population. One-sixth of the world's population lives here. One important change which is taking place is that populations in most developing countries is contracting. In fact, they are aging," he said
He pointed out that the family system had also cracked up in those countries. He cited a study that 30 percent of the families in city of London are single person families.
The finance minister said education had an important role in developing the human resources, and it was an economic necessity to create best educational institutions in India.
He said visit to great campuses give inspiration as one get to see "different India, aspirational India and globally connected and young enterprising minds who want to break the shackles".
People already underemployed in agriculture
Talking about Telangana, Jaitely noted that it was born out of struggle and aspiration. "Obviously it has some advantages. Hyderabad itself is a big advantage. Within a short time its ability to catch up is going to be there," he said but suggested that instead of concentrating in and around Hyderabad, the equity should spread across the state.
"I have no doubt Telangana would be way ahead of national average as far as income and earnings are concerned and its ability to push up India's growth because of its natural advantages," he added.