With an estimated GDP growth to be upwards of 7.6 percent, the Indian growth story seems set for a revival. Addressing the Papua New Guinea Business Council President Pranab Mukherjee corroborated the sentiment. He said that the Indian economy has the potential to grow at 8-10 percent per year over the next couple of decades. "India today stands poised for another leap forward that is predicted to be around India's GDP growth to be about 7.6 percent in 2016-17 and going to have a higher growth rate in the coming years," said Pranab Mukherjee on the 30th of April. "In fact, the Indian economy has the potential to achieve 8-10 percent GDP growth per year over the next couple of decade". A report by Nomura, a Japanese financial service major, had said the India's GDP growth is likely to pick up to 7.8 percent (estimated) in the current fiscal year, largely driven by factors like higher discretionary demand low inflation and a flexible monetary policy stance. With positive signs on the horizon, these developments are surely welcomed by a resurging Indian economy.
Parallel to this, there is a different set of future prediction that will define the success of the Indian growth story. The latest UNDP Regional Human Development Report, on 26th April, stated that India’s working population that is people in the age group of 15 to 64 years is to grow to over a billion by 2050. “China and India comprised 62% of the region’s share in 2015, with one billion and 0.86 billion workers, respectively,” the report says. “But China’s share of working-age people is now falling, while India’s continues to rise, expected to touch a maximum of about 1.1 billion in 2050.” Given this rise in the nation’s employable population, how have we fared at creating jobs to absorb this very significant chunk of our population? According to the report Between 1991 and 2013, for instance, “the size of the working-age population increased by 300 million while the number of employed people increased by only 140 million—the economy absorbed less than half the new entrants into the labour market,”. This combined with the changing demand of skill sets by employers might make the situation acuter. The World Economic Forum Future of Jobs report, released earlier this year had stated a significant fall in the number of jobs being generated as a result of changing skill set preferences and an increase in automation of work due to developments in the field of robotics, machine learning, and artificial intelligence.
Addressing such concerns, The Indian government set aside Rs.1,700 crore for skill training purposes, in the recent budget purposes, which will be used to set up 1,500 multi-skill training institutes across the country. This was then supported by initiatives like promoting higher education. Jaitley said the government will set up a Higher Education Financing Agency (HEFA) with an initial capital base of Rs.1,000 crore. Jaitley also proposed to further scale up the Pradhan Mantri Kaushal Vikas Yojna to impart skill training to 10 million young people over the next three years, from the current 2.4 million.
But such initiatives mostly end up being great schemes on paper rather than changing conditions on the ground. Job creation still suffers and looking at the latest set of data released by the Labour Bureau fails to raise hope. As per the Bureau, no new jobs were created but rather there was actually a decline of 20,000 jobs across eight labour intensive sectors in the December quarter of 2015. The total number of new jobs created across the eight sectors between January-December 2015 stood at just 1.35 lakh. This is the slowest pace of new jobs being created since 2009. Although this isn’t a widely representative sample of job creation across the country, this points towards the need for better planning and execution on the governments’ side. UNDP, for example, suggests countries such as India, with large low-income populations, big agriculture sectors and high rural-to-urban migration, could focus on specific industries, particularly in manufacturing, to create jobs. “This switch has been key to high job growth in China, leading to a significant decline in poverty. In India, in contrast, the manufacturing base is still small, contributing to only 15% of GDP and 11% of employment,” the report said.
Although it will be a while before the new initiatives set in place start delivering results, the government needs to proactively work closely with both businesses and educational institutes to ensure that the growth of the Indian economy translates into a meaningful upliftment of the employability situation in India. For example, a recent ASSOCHAM study has found how Barring a handful of top business schools like the IIMs, most of the 5,500 business schools in India are producing “unemployable” sub-par graduates, earning less than Rs 10,000 a month if at all they find placements. This points out the need for both state and national governments to take active steps towards ensuring that the demand for employability matches the supply of such opportunities. Only then can India chart a route to sustainable growth and use its demographic dividend to its advantage.