Unemployment: The youthful face of India's economic distress

The most striking aspect of travel through northern India is coming face to face with the large number of unemployed youth living in a state of complete despair. Avenues for employment are non-existent. The majority see little prospect of finding a regular job.

Pessimism is written large on the face of 24-year-old Rahul Chauhan, who lives in a village outside Varanasi. He has taken to spending time to help his father on his two-acre farm, or else a friend who runs a small Xerox centre on the main national highway from Varanasi to Azamgarh. This seems to be the fate of many a young man or woman who has cleared their higher secondary exam; yet others are graduates, many of whom have been desperately trying their luck in competitive exams.

The recent ILO and Institute of Human Development’s ‘India Employment Report 2024’ has highlighted that 80 per cent of India’s unemployed workforce comprises youth. More significantly, unemployment among young people with secondary education or higher has surged from 35.2 per cent in 2000 to 65.7 per cent in 2022.

This report has forced India’s chief economic advisor V. Anantha Nageswaran to admit that “youth unemployment rate increased more than twofold between 2000 and 2019, from 5.7 per cent to 17.5 per cent, but then decreased to 12.4 per cent in 2022”.

Most of the youth see little chance of finding regular employment. They believe they will end up in the informal workforce or else forced into some form of ‘self-employment’, with little chance of protection under social security measures like health insurance.

The highest youth unemployment rates were observed among those with graduate degrees—a trend impacting young women disproportionately. In 2022, women not engaged in employment, education or training numbered almost five times their male counterparts (at 48.4 per cent versus 9.8 per cent) overall—but accounting for around 95 per cent of the total youth population in this category.

Economist Prof Arun Kumar believes this growing pool of unemployed youth is the direct result of the present government’s economic policies, in which 80 per cent of all investment is going into the organised sector. Says Kumar, “The government’s strategy has been to promote the private organised sector even though it is the unorganised sector that employs 94 per cent of the population.” He cites the example of agriculture, where 46 per cent of the workforce is employed but which receives just 5 per cent of the nation’s investment. “There are no jobs being generated in agriculture, as the push is towards more and more mechanisation,” he says.

“The educated youth are taking exam after exam and still not finding work,” adds Kumar. “They are frustrated. Their families are frustrated. So they turn to drugs and drinking. This has increased violence within families. The situation for women is even worse, as they too are getting educated but not finding employment.”

When the government claims the economy is growing at 8 per cent per annum, they are talking of the GDP growth in the organised sector; but these statistics exclude the unorganised sector, where the rate of growth is only 1–2 per cent—which this has been the case for the last 5–6 years. “If the growth in both the organised and unorganised sectors is taken together, then India’s rating slides down to being only the ninth largest economy in the world,” says Kumar, despite having the biggest population.

Economist Prof Santosh Mehrotra, who is chairperson at the Centre for Informal Sector and Labour, is equally critical of the economic performance of the Modi regime.

He points out that in the last eight years, the number of non-agricultural jobs has declined sharply from 7.5 million per annum in 2013 to 2.9 million by 2019. During the 10 years of Manmohan Singh’s premiership, the economy was creating 7.5 million non-agricultural jobs every year, allowing 5 million people to exit agriculture every year.

He contrasts this with Modi’s tenure, where a hastily imposed severe lockdown introduced on 4 hours’ notice resulted in 35 million people moving back to agriculture in 2020 alone. The second wave of Covid-19 saw another 10 million reverting, followed by the third wave washing back another 15 million.

The economic productivity in agriculture remains low. Although the sector employs 42 per cent of the workforce, it contributes only 15 per cent of our GDP.

The ill thought-out demonetisation, meanwhile, hit India’s manufacturing sector. The sector which contributed 17 per cent of the GDP between 1992 and 2015 slid down to 13 per cent, before climbing back to 17 per cent only by 2022–23.

According to National Sample Survey Office (NSSO) data for 2017–18, unemployment was at an all-time high in the last 45 years, having risen from 2.2 per cent in 2012 to 6.1 per cent. No wonder young people are frustrated and unable to find jobs. Unemployment levels for youth between 15 and 29 years has doubled and then tripled in the last decade.

No wonder poverty levels have risen exponentially too. The World Bank in its report of September 2022 said that individuals living in poverty had risen by 70 million—of which 56 million came from India alone. “Were it not for MNREGA and free rations, there would have been food riots across India,” Mehrotra believes.

Economic course correction is the need of the hour because the demographic dividend of the early 1980s will end by 2040. Six years ago, 32 per cent of our workforce was over 45. Today, 49 per cent is over 45 years of age. Sixteen years hence, India will have become an ageing society with 91 per cent of our society having no access to old age pensions and other social security and health benefits.

Sadly, it is these high inflation levels along with unemployment that have created a situation where consumer demand is not rising—and this has disincentivised these same corporate houses from making further investments that could have been the fillip that the employment market needed.

The government needs to urgently course-correct and start investing in the small and medium sectors, as also in education, health and the social sector, as all of these areas help generate employment. Otherwise, there will be a marked further acceleration in social tensions.

But this government has little attention to spare for the sufferings of the people it purportedly serves, especially the youth—the first-time and future voters. Instead, this government is following a policy of diversion, believing divisive politics and vitriolic rhetoric can trump their experience of felt hardships. The course correction, then, is left to history.