India’s unemployment rate set to fall – report
India’s unemployment rate is expected to fall from 4.47% to 3.68% by 2028, a report by the Observer Research Foundation (ORF) think tank has projected. The service sector will lead the way in terms of job creation as the country’s GDP moves towards the $5 trillion mark by 2027.
As India approaches its goal of becoming a $5 trillion economy, employment could rise by 22%, the ORF report predicts. To reach its target, the economy needs to maintain its current growth rate. India recorded GDP growth 8.4% in the third quarter of the 2023-24 financial year, up from growth of 7.6% from June to September. Meanwhile, New Delhi has raised its GDP growth forecast for the 2023-24 fiscal year from 7.3% to 7.6%.
“India’s job market is experiencing a transformation as the country has become the world’s fastest-growing large economy in the aftermath of the Covid-19 pandemic,” the India Employment Outlook 2030 report noted.
It highlighted opportunities in the service sector – from digital to financial, health and hospitality services, followed by consumer retail, renewable energy and e-commerce – having the potential to create more than 100 million new jobs by 2030.
The country’s young population is believed to be key for greater economic expansion. According to the ORF, sectors identified as “aspirational” by the 600 million people aged between 18 and 35 could act as “engines of growth” in the coming years.
“Policymakers and public sector schemes could partner more closely with other stakeholders to identify employability and skill gaps,” said Nilanjan Ghosh, a director at ORF and one of the authors of the report.
He said the next step towards improving employability would be to update education programs, making India’s talent pool more “industry-ready.”
One of the priorities, ORF noted, should be upskilling, financial inclusion and entrepreneurship among women. Last year, a report by Barclays titled ‘India’s breakout moment’ also suggested that the country could maintain GDP growth of 8% by ensuring that women account for more than half of the new workforce by 2030. At present, India’s female labor force participation rate stands at 37%, according to the Ministry of Statistics and Program Implementation.
The report comes amid heated discussion about India’s struggle to increase employment rates. According to the government data, the unemployment rate dropped to 6.6% in the first half of the 2023-24 financial year from 7% in the second half of the previous year.
Data from the independent Center for Monitoring Indian Economy (CMIE) think thank put the unemployment rate at 8% in February – a sharp increase from 6.8% in January 2024. Experts have argued that, while the growing economy is creating employment, most of the jobs are for unskilled and semi-skilled workers, while those with higher qualifications are struggling to find jobs.
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