Unemployment, A Challenge for The Economy
STORIES, ANALYSES, EXPERT VIEWS
Former Finance Commission Chairman Arvind Panagariya believes India's main challenge isn't creating jobs but reallocating capital to more labor-intensive sectors. Too much capital is tied up in industries that don't hire many workers, he said. "The problem lies in the industry's composition, especially manufacturing," Panagariya told NDTV in an interview.
ET recent survey however, highlighted that the unemployment is one of the primary challenge for the next NDA government. As per a voter survey conducted by ET Online, the new Modi government faces five key challenges: unemployment, inflation, inequality, farmer protests, and a perceived rise in authoritarianism, marked by a growing number of opposition leaders incarcerated.
Job scarcity: The survey revealed that job scarcity is the most pressing unresolved issue, with 40.8% of respondents expressing concern. Following closely is a prevailing sense of inequality, highlighted by 31% of respondents as a significant issue. Inflation is also a pressing concern, with 19.7% of respondents citing it as a critical issue requiring government attention.
Youth unemployment: Former Chief Economic Advisor Kaushik Basu (presently an economics professor at Cornell University) had also sounded alarm bells last month, warning that India's youth unemployment rate is alarmingly high. Citing data from the Centre for Monitoring Indian Economy (CMIE), Basu pointed out that the rate has surged to 45.4%, one of the highest globally.
Decline in formal employment: The quality of jobs, notes the survey has also become a major concern. There has been a decrease in formal employment opportunities, with state jobs being deferred for years. The Armed Forces' adoption of the 'Agniveer' model, involving short-term contract soldiering, has further diminished stable job prospects for the youth. This change affects a demographic with a median age of around 30 years, according to Statista's report of a median age of 32.4 years in 2020.
Additionally, while the number of workers in agriculture in India has risen from 200 million to 260 million in the last three years, primarily due to reverse migration during the 2020-2022 period, this surge has not translated into productive employment.
