The case for jobs in India

As Indian elections unfold, candidates across political parties take pride in India having the world's largest youth population - over 360 million.

But more than 15 million aged 18-29 are unemployed, and at least 100 million are NEET, ie not engaged in education, employment, or training. While many nations struggle with high youth unemployment, India’s jobs crisis is particularly acute because of its structural nature and scale.

In the absence of any late industrialisation, as seen in East-Asia, India experienced a slow structural change from its largely agricultural, informal economy to labour-intensive manufacturing and services. While the economy has primarily shifted to services, the declining export-competitiveness and weakening local industries after the rise in imports post-1991, led to what experts call ‘jobless growth’.

Some progress on unemployment has been made; between labour force surveys in 2021-22 and 2022-23, approximately over 42 million more Indians are now employed, and 6 million are estimated to no longer be unemployed. However, some experts have expressed concerns, arguing that it could be distress-induced self-employment.

The governance challenge of creating more jobs than the population of Australia

First, the state’s function is to “serve the governed” and its authority is justified for its “ability to protect and promote the people’s wellbeing”. Article 41 of the Indian constitution, and the Mahatma Gandhi National Rural Employment Guarantee Act underscore a citizen’s statutory right to work. This mandates the government to provide work, which is especially needed to prevent a Hobbesian ‘State of Nature’ amid growing evidence linking jobless youth with public disorder (Img 1), and communal violence. And looking beyond the 5% rate of unemployment helps us understand the depth of this governmental mandate. Today, the Central and state governments in India face the task of creating more jobs than the population of Australia.

Second, to address the systemic nature of the crisis, India requires a mix of social, employment, and industrial policies, tailored to its diverse sub-regional demographics, priorities, and local expertise. For example, over 50% of diploma holders in rural Jharkhand and Sikkim are unemployed, and over 20% graduates and postgraduates in urban Rajasthan and Himachal Pradesh also face unemployment. Thus any vision of a ‘Viksit Bharat’ (developed India) by 2047 must include reimagining a new jobs policy while reconsidering our “minimum government” approach.

State-led investments can help fix market failures and create centralised (through public-owned infrastructure building) and decentralised (through clusters & MSME-led) low-carbon jobs. This is crucial, considering the growing conversation on the role of an ‘entrepreneurial’, ‘embedded’, and ‘experimental’ state in the structural transformation of countries. Furthermore, the opposition’s critique, though documented in ‘black papers’, offers no meaningful alternative economic vision. In the past, the Indian National Congress has primarily proposed state-level unemployment allowances, which make little sense as they potentially skew incentives and are impractical on a large scale, allowing the state to shirk its duty to create and provide work.

Third, job-creation now requires a renewed focus on the quantity of jobs, the demand-side of employment, beyond the ‘supply-side’ focus on job-appropriate skilling, or laws aimed at job ‘quality’. The Centre’s 12 major active ‘employment generation schemes’ largely focus on skilling youth or financing MSMEs. While the Centre’s ‘Skill India’ scheme placed approximately 22% of ‘certified’ youth into jobs, the ‘MUDRA’ loans averaged less than $800 per loan, indicating at most incremental self-employment. In such a skilling-heavy policy-mix, state-led investments with a clear outcome orientation for new jobs created, beyond its Production linked Incentives (PLI) schemes and expansionary CAPEX spending, can further ‘crowd-in’ and boost low private investment, enhance productivity, and sustain job-creation. Further, these investments can provide the required local social infrastructure that creates jobs, boosts rural demand, and reduces fiscal burden from subsidies.

Addressing the needs of rural youth and women

Lastly, a strong focus on rural youth is essential since they comprise nearly two-thirds of India’s unemployed youth and two-thirds of those are educated above grade 10. According to a Ministry of Education report, approximately 80% of rural parents want their children to be educated at least until graduation. Therefore, the state must create new jobs for educated, aspirational rural youth who no longer aspire to engage just in agriculture or spend years “waiting” and studying for government job exams. Further, over three-quarters of NEET youth in India are women, mostly “attending domestic duties”, which also requires addressing deeply embedded norms around gender, mobility, and informality.

The ruling party BJP’s election manifesto addresses job creation vaguely through incremental ideas to promote startups and industries. The Congress, meanwhile, promises to fill three million public job vacancies and create a Germany-styled apprentice scheme in its manifesto. However, this scheme would significantly increase India’s fiscal deficit and still focus on training graduates without creating additional demand for skilled graduates.

When unemployment is India’s single-most important voting issue in 2024, political parties and policymakers must aggressively strive to address the aspirations of 100 million+ young Indians like Ravish, who spend years waiting for an ‘opportunity’ with crushed dreams in their eyes.

Saubhagya Raizada (MPP 2022) is an independent policy researcher based in India.