World’s Fastest-Growing Economy Isn’t Creating Jobs Like Before
India may be clocking one of the best economic growth rates among all other emerging markets and major economies, but data suggests that employment in the country has been declining. In comparison, the growth rate in the 1970s and 1980s, clocked at 3-4%, was generating almost 2% employment growth. The outcome is an unemployment rate that’s hit 5% in 2015, the highest in at least 20 years.
The main reason for the worsening correlation between growth and jobs was a mismatch between skills and “good jobs. The share of the so-called goods jobs that broadly includes formal employment with regular pay accounted for only 17% of the country’s 467 million workforce. Higher growth has raised aspirations but has failed to generate the kind of jobs that will allow people to fulfill those aspirations.
Growth has averaged 7% since reforms began in 1991 under Prime Minister P.V. Narasimha Rao to open up the economy. The most recent figures show gross domestic product expanded 8.2% in the three months through June from a year earlier, making India the world’s fastest-growing major economy. India is on track to hold that position, with the International Monetary Fund retaining its growth forecast of 7.3% for the fiscal year through March 2019.
Still, unemployment remains high, especially among young and educated Indians. More than one-third of about 23 million people who were actively searching for jobs have graduate or higher levels of education. Failure to create opportunities for the young workforce will not only hurt Prime Minister Modi’s re-election bid next year but impede the economy’s current pace of expansion.
The government continues to refute the argument, suggesting data retrieved from EPFO or Employees Provident Fund Organisation, which provides data on new employment. However, as mentioned earlier, the focus should be on creating desirable jobs something that the country seems to be lacking. The performance of the present government on job creation is also expected to be a key issue in the upcoming general elections in 2019.
Not just jobs, the general elections 2019 is snowballing into a big challenge for the ruling NDA, considering the number of economic issues that have popped up. From solving the issue bad banks to finding a solution to incessant fuel price hike, the government seems to have its work cut out for the next few months leading to the key elections in 2019.