According to Citi, in order to accommodate the influx of new workers into the labor market over the next ten years, India would need to produce almost 12 million jobs annually.
Even if the economy expands at a quick pace of 7%, India will struggle to produce enough jobs for its expanding population over the next ten years, according to Citigroup Inc., indicating that the most populous country in the world will need to take more deliberate action to increase employment and skills.
According to Citi, in order to accommodate the influx of new workers into the labor market over the next ten years, India would need to produce almost 12 million jobs annually. India can only produce 8–9 million jobs annually based on a growth rate of 7%, according to a research released this week by the bank's economists Samiran Chakraborty and Baqar Zaidi.
One other issue, according to the economists, is the quality of employment being generated in India. Despite the fact that agricultural only makes up 20% of the GDP, an examination of official statistics revealed that 46% of the labor force is still involved in this industry. According to the data, manufacturing provided 11.4 percent of all employment in 2023, a decrease from 2018 and an indication that the industry hasn't recovered from the epidemic.
Additionally, fewer individuals are working in the formal sector today than they were before to Covid; according to Citi, the percentage was 25.7% in 2023, the lowest level in at least 18 years. In India, just 21% of the labor force, or around 122 million people, have employment that are compensated with a salary or wages, down from 24% before to the epidemic. According to the data, almost 50% of India's 582 million workers are independent contractors.
Voters in previous elections expressed grave concerns about India's high rate of unemployment, particularly among young people, and blamed it for the decline in support for Prime Minister Narendra Modi's governing party.
The majority of analysts depend on statistics from the Centre for Monitoring Indian Economy, a private research group, which puts the unemployment rate at 9.2 percent in May, the highest in eight months, underestimating the severity of the issue. The official unemployment rate is 3.2%. CMIE records show that the rate is above 40% for those in the 20–24 age group.
The economists at Citi suggest a number of initiatives to increase employment in India, including bolstering the industrial sectors' export potential, expanding incentives to draw in foreign businesses, and filling around a million government positions. The economists concluded that for greater effect, the government should combine several initiatives aimed at creating jobs.
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