How infrastructure investments may be slowing job creation

Source– The post is based on the article “How infrastructure investments may be slowing job creation” published in “The Indian Express” on 25th August 2023.

Syllabus Topic: GS 3- Indian Economy – Employment and unemployment

News- In this article the author discusses lopsided development policies which have resulted in fewer job creation for millions of youths who join the labor force every year.

What is ‘Growth-Unemployment paradox’ which is observed in case of India?

India has been the fastest growing economies of the world. India’s growth has attracted headlines. But nearly a quarter of young people are unemployed. This coexistence of high growth and high unemployment is called ‘Growth-Unemployment’ paradox.

What are the lopsided development policies which have led to ‘Growth-Unemployment’ paradox?

Firstly, India has focused heavily on improvement of physical infrastructure but has fallen behind on human infrastructure like education and skills. Physical infrastructure in the absence of good human infrastructure has slowed the pace of job growth.

Secondly, India’s infrastructure development has focused largely on Urban areas. However, India’s manufacturing sector is rapidly de-urbanizing and moving away from urban to rural areas to remain competitive. As the rural areas lack the necessary physical and human capital, manufacturing sector growth has slowed down resulting in increased unemployment.

Thirdly, there has been a lack of focus on infrastructure development in Tier II cities which have the potential to generate 70% of new jobs in the next 20 years.

What are the measures that must be taken to correct this ‘Growth-Unemployment’ paradox?

Firstly, Policymakers must focus upon the development of both physical and human infrastructure in rural areas and tier II cities as the manufacturing sector across the world is witnessing de-urbanization.

Secondly, India must invest heavily in the tertiary education sector which has the potential for development of new age entrepreneurship and subsequent job creation.

Lastly, the governance system needs to be improved to track the progress of investments and their effects in the field of job creation. Every penny of investment by the government needs to yield jobs.