Why India’s World-Beating Growth Isn’t Creating Jobs

Few major economies have been growing as fast as India’s. Beyond the relatively strong figures, though, lies the grim reality of rising unemployment. The nation of 1.4 billion people isn’t creating enough jobs for its expanding population, a problem that Prime Minister Narendra Modi has promised to prioritize. That’s proved tough, though, especially as the private sector has balked at making major new investments, deterred by dim business conditions. Tensions boiled over last June when angry youth facing bleak job prospects blocked rail traffic and highways in many states for days, even setting some trains on fire.

The unemployment rate has been hovering around 7% or 8%, up from about 5% five years ago, according to the Centre for Monitoring Indian Economy, a private research firm that produces data that is more timely than official statistics. (A drop in September to 6.4% was attributed to extra hiring around India’s holiday season, an annual phenomenon. It was back at 7.8% in October.) The rate has remained elevated even though the total workforce has shrunk: Millions of people dejected over weak job prospects have pulled out, a trend that was exacerbated by the pandemic. The labor force participation rate — which counts people who are working or looking for work — has dropped below 40%, from 46% six years ago, according to the CMIE. By comparison, the rate in the US has been about 62%.