India To Face Acute Unemployment Crisis, Warns UNDP

Illustration - Photo: Birsha Ohdedar, Flickr

United Nations Development Programme (UNDP), the global development network of the world body, has predicted in its latest ‘Asia-Pacific Human Development Report’ that India may see severe shortage of jobs in the next 35 years.
In the report, the UNDP said that developing countries, like India, should concentrate on specific industries, such as manufacturing, in order to create more job opportunities. After closely monitoring the job markets in these countries, UNDP experts find that developing economies managed to absorb less than half the new entrants into the labour market between 1991 and 2013. During this period, the size of the “working age” population increased by 300 million.

As far as the Indian economy is concerned, it could provide jobs to only 140 million people in the next three decades mainly because of its limited capacity to generate employment opportunities. As per the report, around 280 million more people will enter the job market in India in the next 34 years.

The report has raised a few eyebrows in India, as the Labour Ministry data show that around one million people enter the workforce in the country every month. From the ministry data, it becomes clear that a huge number of Indians will fail to find jobs in the coming years. The poor job market has already prompted many Indians to continue their study. Currently, nearly 30 million students are pursuing higher education in India and majority of them have no jobs.

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UNDP experts are of the opinion that the large low-income populations, big agriculture sectors and high rural-to-urban migration have made the situation difficult for India. They have advised the Indian government to boost the manufacturing sector in order to create jobs. According to them, India should follow the policy adopted by neighbouring China. “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 the GDP and 11% of employment,” said the report.

At the same time, UNDP experts have appreciated Prime Minister Narendra Modi’s ‘Make in India’ initiative, saying that the project could attract foreign investment, especially in the manufacturing sector. They believe that “India could reap a demographic dividend, if it succeeds”.

Meanwhile, Professor (of Economics) at New Delhi-based National Institute of Public Finance and Policy N R Bhanumurthy has blamed the nature of Indian economic growth for the scenario. He stressed that India had experienced services-led growth with low employment intensity from 1991 to 2013. “The new government seems to have realised the issue. The problem could be addressed if the government’s effort to create more manufacturing jobs through programmes, such as ‘Make in India’ and ‘Start-up India’ fructifies,” added Bhanumurthy.

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