New Study Points to India’s Jobless Economic Growth

The Study by IIM and BITS Calls for Structural Reforms

Newsreel Asia Insight #136
Feb. 19, 2024

A new study, looking at how jobs and the economy have grown in India from 1983 to 2021, shows that even though the economy has been growing, this hasn’t led to enough new jobs for everyone. This means that the recent growth in India’s economy hasn’t created the kind of work that a lot of people can do, leaving many without jobs despite the economy getting bigger.

From 1987 to 2005, India saw strong growth in both its economy and the number of jobs available. But after that, until 2019, the economy kept growing without creating many new jobs, says the study, conducted by D. Tripati Rao and his colleagues from the Indian Institute of Management, Lucknow, in collaboration with researchers from Birla Institute of Technology and Science, Pilani, and the Union Ministry of Agriculture and Farmers Welfare, as reported by The Hindu. There was a small improvement in job creation after 2019, it says.

The study found that even though farming employs a lot of young people, it doesn’t add much value to the economy compared to how many people work in it. This shows that farming isn’t as productive as it could be and isn’t making the best use of people's skills. This situation points out the need for new policies to make farming more productive and valuable, maybe by using new technology and improving how farmers sell their products.

The researchers suggest focusing on industries that need a high number of workers to help the economy grow in a way that includes everyone. By picking out and supporting industries that can create lots of jobs, government officials can help more people find work, learn new skills and make the economy more varied. This will not just help reduce unemployment; it will also help make society more fair by reducing the gap between rich and poor.

The study also pointed out big differences in job participation rates between men and women, and it found that the highly educated youth are more likely to be unemployed. These issues show there are big obstacles for women getting jobs and a gap between what people learn in school and what jobs are available. To fix these problems, there need to be specific policies aimed at getting more women into the workforce and making sure education matches up with the kinds of jobs that are out there.

The study suggests that the government needs to update its economic strategies.

By bringing in new technology and making it easier for farmers to sell their products, farming can become more valuable and create more jobs. For example, technologies like GPS mapping, drone surveillance and soil moisture sensors can help farmers understand their fields better. This leads to more precise planting, watering, and fertilising, which can increase crop yields and reduce waste. Similarly, developing better roads, storage facilities and transportation can reduce post-harvest losses and ensure that produce reaches the market in good condition. This increases the income of farmers and encourages them to produce more.

Further, supporting industries that require a lot of labour can help more people find jobs, boost the economy, and lead to significant changes in how the economy is structured. Such industries include textiles, apparel, footwear, agriculture-based industries and certain segments of the service sector like hospitality and retail. This is particularly important in regions with a large workforce and high unemployment rates.

When more people are employed, there is an increase in income levels, leading to higher consumer spending. This spending fuels demand for goods and services, stimulating further economic activity and growth. Moreover, labour-intensive industries often have a multiplier effect, meaning that job creation in one sector can lead to additional jobs in related industries, such as supply chains, distribution and retail.

Furthermore, it’s important for the government to work on making sure women have the same job opportunities as men. This includes encouraging women to start their own businesses, making sure they get paid the same as men and giving them better access to education and job training.

This includes providing grants, loans and subsidies specifically designed for women-led businesses with lower interest rates and accessible credit facilities. The government can offer programs that help women acquire the skills needed to start and run a business successfully. It can also run mentorship programs can connect aspiring female entrepreneurs with experienced business leaders. The government can also implement and enforce laws that mandate equal pay for equal work, regardless of gender. Regular audits and reporting can help monitor compliance.

The government should also implement policies that support working mothers, such as affordable childcare services and parental leave. This can help women return to work after childbirth and balance work with family responsibilities.

Last but not the least, schools and colleges need to make sure what they teach matches up with the kinds of jobs available. Educational institutions should work closely with industries to understand current and future skill requirements. This can involve advisory boards consisting of industry professionals who can provide insights into the evolving job market.

Regular analysis of labour market trends can help identify which sectors are growing and what skills are likely to be in demand. This information should guide curriculum development and course offerings.