The great Indian job paradox: A $3.5 trillion economy with 2.6 million vying for 7,500 jobs

India’s economic landscape presents a stark contrast. On one hand, the country celebrates extravagant events like the wedding of billionaire Mukesh Ambani's son Anant to Radhika Merchant, symbolizing immense wealth.

On the other hand, millions of Indians face a harsh reality, struggling to even earn enough to make ends meet. Despite being the world’s fastest-growing major economy, many young Indians are grappling with a challenging job market.

220 million applications for federal jobs: a quest for security

Between 2014 and 2022, 220 million people applied for federal jobs in India, yet only 722,000 were selected.

This staggering figure, while including repeat attempts, highlights the immense pressure and competition for government employment.

For many, a government job represents stability in a volatile job market.

Ritesh Verma, a Bhubaneshwar resident, runs a roadside tea stall to make ends meet even as his dreams of a stable job fade.

This cultural and economic anxiety underscores the preference for government positions, viewed as more secure compared to private sector jobs in a country with a population exceeding 1.4 billion.

Employment statistics: a bleak picture

Since 2014, India's GDP has surged from $2 trillion to nearly $3.5 trillion in the fiscal year 2023-24, with an expected growth rate of 7.2% this year.

However, this economic boom has not translated into adequate job creation.

Government data indicates that 20 million new job opportunities have been generated annually since 2017, but private economists argue that much of this consists of self-employment and temporary farm work rather than stable, formal employment.

India will struggle to create enough jobs for its growing workforce over the next decade even if the economy grows at a rapid pace of 7%, according to Citigroup Inc.

This suggests that the world’s most populous nation will need to take more concerted steps to boost employment and enhance skills among its population.

12 million jobs needed annually to meet labour market demands

Citi estimates that India will need to generate approximately 12 million jobs annually over the next decade to accommodate the influx of new entrants into the labor market.

However, even with a robust growth rate of 7%, India is expected to create only 8-9 million jobs per year, as per the bank’s economists Samiran Chakraborty and Baqar Zaidi in a recent report.

The report highlights the disparity in job quality as another significant challenge. Despite agriculture employing about 46% of the workforce, the sector contributes less than 20% to the gross domestic product (GDP).

The manufacturing sector, which is crucial for economic diversification and higher wage employment, accounted for only 11.4% of total jobs in 2023, reflecting a decline from 2018 levels and indicating that the sector has not fully recovered since the pandemic.

Government's response and official data

The labor ministry has rebutted Citi’s findings, emphasizing that the report overlooks comprehensive and positive employment data from official sources such as the Periodic Labour Force Survey (PLFS) and the Reserve Bank of India’s KLEMS data.

The ministry asserted that the report "fails to account for the comprehensive and positive employment data available from official sources."

Discontent over job opportunities was a significant factor in Prime Minister Narendra Modi's party failing to secure a majority on its own in the April-May general election, relying on allies to return to power.

The upcoming budget is expected to focus on job creation, potentially through tax incentives for new manufacturing facilities and local procurement encouragement across various sectors.

However, these measures will take time to materialize into tangible employment opportunities.

Aspirations for government jobs: benefits and corruption

The allure of government jobs lies in the lifelong security, health benefits, pensions, and housing they offer, which are often lacking in private employment.

Additionally, the prospect of “money under the table” in government jobs, though rarely admitted openly, adds to their appeal.

The intense competition for government jobs is evident in the number of applicants for limited positions. Earlier this year, nearly 5 million students applied for 60,000 vacancies in the Uttar Pradesh police force.

Similarly, an exam for constable positions in central government security agencies drew 4.7 million applicants for just 26,000 posts.

A separate examination for office boys and drivers in government departments saw close to 2.6 million applicants for about 7,500 jobs.

Despite the high demand, nearly 6 million government jobs remain unfilled across various sectors, including armed forces, schools, health services, and the military, as estimated by the Indian National Congress, the main opposition party.

The broader implications

The disparity between economic growth and job creation highlights a significant challenge for India. The country's booming economy has not alleviated the struggle for stable employment among its youth.

This disconnect points to structural issues within the job market, where economic expansion has not translated into sufficient formal employment opportunities.

Addressing this challenge requires comprehensive policy measures that go beyond immediate job creation. Enhancing the quality and stability of private sector jobs, fostering a culture of meritocracy, and addressing the underlying economic anxieties are crucial steps.

The government’s focus on job creation through incentives and procurement policies is a positive move, but its impact will take time to be felt on the ground.