Solutions for job creation: India’s missing jobs

Source: The post solutions for job creation has been created, based on the article “India’s missing jobs — and where the next government can find them” published in “Indian express” on 13th April 2024.

UPSC Syllabus Topic: GS Paper 3 – Indian Economy – Issues related to Growth and employment

News: The article discusses India’s job creation challenges. It mentions Meta opening a data center in India but highlights that India needs many more jobs. It critiques India’s reliance on services for economic growth and suggests diversifying into high-tech, startups, green energy, and manufacturing to create jobs.

For details information on Employment status in India Article1, Article2,

What is the current job situation in India?

Low Employment Rate: Only 46.6% of India’s working-age population is currently employed, which is significantly lower than the approximately 70% seen in other emerging markets.

Job Creation Needs: India needs to create 90 million new non-farm jobs by 2030 to keep pace with its growing working-age population.

Service Sector Focus: The Indian economy has heavily focused on service industries, employing 5.4 million in IT and back-office roles, but faces challenges such as automation reducing job opportunities.

What challenges are the service sectors facing?

IT Sector Decline: For the first time in 25 years, the IT sector, a cornerstone of India’s service economy, has experienced shrinkage, influenced by increasing automation and artificial intelligence.

Low Wages and Migration: Many workers in low-skilled service jobs earn so little that they preferred staying in their villages after the COVID-19 lockdowns, rather than returning to urban jobs.

Skill Gap: There’s a significant skill shortage in the country, with the 2023 India Skills Report indicating that only half of young Indians are employable, which limits their ability to participate in more advanced, skill-intensive service roles.

What are the proposed solutions for job creation?

Global Capability Centres (GCCs): Expansion of GCCs is suggested, with current employment at 1.6 million and expected growth to 4.5 million by 2030. These centers offer services ranging from finance and HR to tech innovation, helping India become a major exporter of services.

Tech Startups: Encouragement for tech startups to scale up, leveraging India’s capabilities in AI, SaaS, defense, and Greentech, which could lead to significant employment gains both directly and indirectly.

Green Energy: Focus on renewable energy with plans to install 500 gigawatts by 2030, aiming to create 50 million new jobs in the green economy.

Manufacturing Sector: Revitalizing the manufacturing sector is crucial, especially for small and medium enterprises that are less prone to automation and can employ more people. This effort should be supported by digital infrastructure to boost their competitive advantage.

Question for practice:

Discuss the challenges faced by India’s service sectors, and the proposed solutions for it.