Indian economy has transformed itself from the phase of ‘Hindu Growth Rate’ i.e. less than 2.5-3% annual growth rate to the phase of emergence as a dominant economic player in the global scenario. Though India has emerged as the fastest growing large economy in the world, posting an annual growth rate of over 7 per cent in last few decades, yet it has failed to create adequate jobs for the growing work force in the country. This article tries to throw light on the problem of jobless growth in India and the way forward to tackle the same.

Problem Statement- The economic gains of LPG policy (Liberalisation- Privatisation- Globalisation) are being overshadowed by the problem of ‘jobless growth’ in India. The Indian youth is facing the problem of unemployment or underemployment despite being the part of world’s fastest growing economy. According to a survey by OECD, more than 30% of Indians aged between     15-29 years are neither in employment nor in any training or education. All India Council for Technical Education (AICTE) data suggests that more than 60% of the eight lakh engineers graduating from technical institutions across the country every year remain unemployed. According to Census 2011, the average growth rate of the economy was 7.7 per cent per annum whereas it was just 1.8 per cent for employment in the country. As per Labour Bureau report on employment, only 2.31 lakh new jobs were created across eight labour intensive sectors of economy during the first three quarters of year 2016-17. This averages to 0.26 lakh new jobs a month (against at least 10 lakh needed), not even a 1,000 jobs a day, or just about 840 new jobs on an average each day of the nine months under review.

Reasons behind the Jobless growth – The dominance of services sector in GDP of India has been mainly responsible for quantum jump in economic growth rate in post-LPG era. The displacement of Indian agriculture by the services sector in Indian economy had been largely responsible for jobless growth in India. Secondly, India has witnessed knowledge-intensive services sector along with some segments of capital intensive manufacturing, as the engines of growth in India in last two decades which are inherently less employment generating sectors. Thirdly, stagnation in manufacturing sector along with contraction of labour-intensive segment of the formal manufacturing sector due to excess rigidity in the formal manufacturing labour market and rigid labour regulations had created disincentives for the employers to create jobs. In addition, the factors like- apathy of Government towards employment generating MSME (Micro Small & Medium Enterprises) sector; increasing role of role of labour saving technologies; emergence of Artificial Intelligence – are further encroaching upon the manpower space in manufacturing sector.

Solutions – The issue of jobless growth in India is a serious issue and needs a comprehensive solution to capitalise over the advantages of 3-D’s in India i.e. Demand, Democracy and Demographic dividend. There is a need of systemic labour reforms, making entrepreneur friendly laws facilitating the creation of more jobs oriented production activities. The issue of import substitution with policies to boost domestic production needs to be given due importance. The recently introduced ‘Make in India’ programme is certainly the good step in right direction. The most important amongst these measures include the pro-MSME policies of Government of India as well as the policies to encourage the budding entrepreneurs. It is also to be noted that prudent macroeconomic policy would bring in more FDI which in turn would aid to create more jobs in India.

The ultimate solution to the problem of jobless growth in India lies in a long term solution of tapping the unique asset of ‘demographic dividend’ in India. More than 65% of Indian population is in the economically productive age group of less than 35 years age. What we require is to nurture these human resources in terms of provision of basic education, health care facilities, raising their standard of living and most importantly improving their skills. The Government of India has already taken various initiatives in last few years in the right direction which include flagship programmes like- Make in India, Skill India Mission, MUDRA Yojana, etc. The think-tank ‘NITI Aayog’s three year action draft plan’ on tapping the human resources to tackle the issue of jobless growth is praiseworthy and needs its immediate implementation.

(The author of this article ,Lt Col (Dr) Satish Dhage, is an ex Army officer and has been qualified for IPS (Indian Police Services) through IPS LCE 2012. Presently, he is Director, MGM Institute of Competitive Exams Aurangabad. For any queries or feedback, he can be contacted on email id : drsatishdhage@gmail.com)