India’s Narendra Modi has a problem: high economic growth but few jobs -Dlight News

India's Narendra Modi has a problem: high economic growth but few jobs

Kiran VB, 29, from India’s tech capital Bangalore, hoped to work in a factory after finishing high school. But he struggled to find a job and began working as a driver, eventually saving more than a decade to buy his own cab.

“The market is very tough; Everyone is sitting at home,” he said, describing relatives with engineering or business degrees who also failed to find good jobs. “Even people graduating from colleges are not getting jobs and are selling or delivering stuff.”

His story points to a critical problem for India and a growing challenge for Prime Minister Narendra Modi’s government as it seeks re-election in just over a year: the country’s high-growth economy is failing to create enough jobs, especially for young people. For Indians, that leaves many without work or toiling in labor that doesn’t match their skills.

The IMF predicts that India’s economy will expand by 6.1 percent this year — one of the fastest rates of any major economy — and 6.8 percent in 2024.

However, the number of unemployed continues to rise. According to data from the Center for Monitoring Indian Economy, unemployment stood at 7.45 percent in February, up from 7.14 percent in the previous month.

“The growth we are getting is mainly driven by corporate growth, and corporate India does not employ that many people per unit of output,” said Pronab Sen, economist and former chief adviser to the Planning Commission of India.

“On the one hand, you see youths not getting jobs; On the other hand, you have companies that can’t get skilled people.”

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Sen said government jobs, which are popular as a ticket to lifetime employment, are few in number compared to India’s population of about 1.4 billion. Skill availability is another issue: many companies prefer to hire older applicants who have developed skills that are in demand.

“Most of the growth in India is driven by finance, insurance, real estate, business process outsourcing, telecom and IT,” said Amit Basol, professor of economics at Azim Premji University in Bangalore. “These are high-growth sectors, but they are not job creators.”

If India is to reap the benefits of the demographic and geopolitical dividends, it will be necessary to figure out how to achieve greater job growth, especially for the youth. The country has a young population that will surpass China as the world’s largest this year. More companies are looking to redirect supply chains and sales away from reliance on Chinese suppliers and customers.

The Indian government and states like Karnataka, of which Bangalore is the capital, are promising billions of dollars in incentives to attract investors in manufacturing industries such as electronics and advanced battery manufacturing as part of the Modi government’s “Make in India” drive.

The state has also recently relaxed labor laws to emulate working methods in China, following lobbying by companies including Apple and its manufacturing partner Foxconn, which plans to make iPhones in Karnataka.

However, manufacturing output is growing more slowly than other sectors, making it unlikely to emerge as a leading generator of jobs anytime soon. According to CMIE’s latest household survey from January to February 2023, the sector employs only 35 million people, while IT accounts for less than 2 million of India’s nearly 410 million formal workforce.

According to a senior Karnataka official, highly skilled applicants with university degrees are applying to work as police constables.

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There are signs that the Modi government is balanced on this issue. In October, the Prime Minister A Employment fairOr the employment campaign, where he handed out appointment letters to 75,000 youth, meant to demonstrate his government’s commitment to create jobs and “skill the youth of India for a brighter future”.

But some opposition derided the gesture, with Congress party president Mallikarjun Kharge saying the appointments were “too few”. Another politician called the fair a “cruel joke on unemployed youth”.

Rahul Gandhi, scion of the family behind the Congress party, has signaled that he wants to make unemployment a point of attack for the upcoming elections, in which Modi is on track to win a third term.

“The real problem is the problem of unemployment, and that is creating a lot of anger and a lot of fear,” Gandhi said at a question-and-answer session at London’s Chatham House last month.

“I don’t believe a country like India can provide services to all its people,” he added.

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Ashok Modi, an economist at Princeton University, used the Indian slang term “timepass,” which means to spend time unproductively, to explain another phenomenon that erodes the job market.

“There are millions of young Indians who are timepassing,” said Modi, author of India is broken, a new book criticizing the economic policies of successive post-independence Indian governments. “Many of them are doing so after multiple degrees and colleges.”

21-year-old Dildar Sheikh moved to Bangalore after completing a high school course in computer programming in Kolkata.

After losing out in intense competition for a government job, he ended up working with a ground handling company at Bangalore’s airport helping passengers in wheelchairs, for which he was paid around Rs. 13,000 ($159) is paid.

“The work is good, but the pay is not good,” said Sek, who dreams of saving enough money to buy an iPhone and give his parents a helicopter ride.

“There is no better place for young people,” he added. “People who have money and connections are able to survive; the rest of us have to keep working and then die.”

Additional reporting by Andy Lin in Hong Kong and Jyotsna Singh in New Delhi

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