India ‘jobless growth’ is seen blunting its population edge

India’s joblessness, especially among young people, was a key concern among voters in the recent elections and was cited as a reason for the drop in support for the ruling Bharatiya Janata Party.
Between 2012 and 2019, employment in India grew by a mere 0.01% annually, with most new jobs being low-productivity roles in agriculture and construction, according to the International Labour Organisation (ILO).
India will struggle to create enough jobs for its growing workforce over the next decade even if the economy grows at a rapid pace of 7%, Citigroup said last week, suggesting the world’s most-populous nation will need more concerted steps to boost employment and skills.
Citi estimates India will need to create about 12mn jobs a year over the next decade to absorb the number of new entrants to the labour market. Based on a growth rate of 7%, India can only generate 8mn-9mn jobs a year.
The quality of jobs being created in India is another challenge. An analysis of the official data showed about 46% of the workforce is still employed in agriculture, even though the sector contributes less than 20% to gross domestic product.
Manufacturing accounted for 11.4% of total jobs in 2023, a lower share than in 2018, the figures show, a sign that the sector hasn’t bounced back since the pandemic.
The Indian government on Monday rejected the Citi report and said in a statement that the authors failed to consider the positive trends and comprehensive data from official sources, asserting that the Asian nation has generated more than 80mn jobs in the five years through 2022.
According to the government, India has generated more jobs than the number of people seeking employment. Labour force participation increased from just under 50% in 2018 to nearly 58% in 2023.
But India’s official unemployment rate of 3.2% underestimates the scale of the problem, with most economists relying instead on data from the Centre for Monitoring Indian Economy, a private research firm, which put the jobless rate at 9.2% in May, the highest in eight month.
With roughly 2.4% of the world’s land mass, India is home to nearly a fifth of humanity — over 1.4bn people, or more than the entire population of the Americas or Africa or Europe.
For sure, there are pros and cons for being the most populous nation on the earth. India’s population boom is an opportunity; it can be an economic threat, too.
Not only does India have more people, it also has one of the youngest populations, UN data shows. More than half its population is under the age of 30, with a median age of 28. That compares with about 38 in both the US and in China.
This youth advantage could play a critical role in unlocking economic growth. With over two-third of its people of working age — between 15 to 64 years old — India could both produce and consume more goods and services, drive innovation and keep pace with the constant technological changes.
Here, then, is the flip side.
India needs to effectively address core problems of poverty, hunger and malnutrition; provide better health and education; and build infrastructure.
Close to a third of the nation’s youth are not in any employment, education or training. Only 5% of the country’s workforce is recognised as formally skilled, according to a 2023 Bloomberg report.
Citi’s economists have proposed a series of measures to boost jobs in India, such as strengthening the export potential of manufacturing sectors, extending incentives to attract foreign companies and filling up about 1mn government vacancies. The government also needs to consolidate multiple employment generation programmes for better impact.
Looking ahead, the short-term economic thinking should give way to a sustainable, futuristic growth vision to create jobs, lift millions of Indians out of poverty and ensure social inclusion.