India’s employment challenge: 20 million jobs to be created every year

The Agnipath military recruitment scheme was criticized during the election campaign and many political commentators expect the new government to be forced to make changes to it. We should view interpretations of the election results with some skepticism, but it seems that the issue of insufficient employment opportunities has bubbled to the surface of our political ocean.

India’s growing economy is creating livelihoods and employment, but not fast enough. We need to create 20 million jobs every year (to cater for the 12 million young people entering the workforce and to transition the 8 million or so farmers languishing in rural areas). This is the required execution rate.

Even if our current lead rate is 5 million per year, we still haven’t reached the target. To put this in perspective, India must create more jobs annually than the entire population of the Netherlands, Sri Lanka or Taiwan. It’s a scary number. However, India cannot become Viksit Bharat without achieving such unprecedented success.

Economic growth is the fundamental engine—the only engine—that can power this quest. High growth is a necessary condition, but it must be complemented by a concerted program to promote employment generation. So what can be done?

Before we get there, it is important not to abuse the notion that government jobs and military recruitment should be employment generation schemes. Yes, there are a large number of unfilled vacancies in the Union and various state governments, and these need to be filled to the brim.

Beyond that, they will constitute an unjustified drain on the economy. Similarly, there is a case for reforming the Agnipath scheme so that personnel can move laterally into the security forces, but it is dangerous to view the exercise through the lens of a recruitment programme.

Here are some ideas on how we can achieve a quantum leap in employment across the country.

First, create well-planned and sustainable new cities. There are many good reasons why India needs new cities. Existing cities are very overcrowded and their growth comes at the cost of quality of life and the environment. New cities can be green cities, with everything from the structure, building materials, natural resources and public services designed to emit lower carbon than if existing cities were to grow.

I have argued before that India can create new cities by building new state capitals, relocating military stations, establishing new universities and innovation campuses. The construction and infrastructure industries can create millions of jobs – from the unskilled to the highly skilled – on a scale that few other sectors can.

Second, attract large-scale production. Yes, it is still possible in the age of robotics and artificial intelligence. We have spent more than a century telling ourselves that India cannot do large industries and manufactures. A look at India’s economic history shows how Mahadev Govind Ranade and BR Ambedkar dismissed the opposition and called for industrialization in the 1890s and 1920s, respectively.

Today, we must reject the argument that Indians can switch directly from agriculture to services, bypassing manufacturing. I am sure there will be millions of people who will make such a leap, as can be seen from the number of people from villages and small towns working in service industries.

But if we are to provide hundreds of millions of livelihoods, this cannot be done without large-scale production. A job-hungry player the size of India could transform the global economy, just as China did over the past three decades or so. To believe otherwise is either escapism or defeatism.

Third, get more women into the workforce. At income levels, every employed woman creates at least one other job. Female labor force participation has been declining and it is still unclear why this is so and how it can be addressed. Deep-rooted social traditions may have something to do with it, at least to some extent. These will be difficult to change directly.

But we know what we can do to make it easier for women to work from home or in workplaces. Toilets, public transport, security, street lights, home appliances, childcare facilities and anti-bullying policies are low-hanging fruit that will show marginal results. The government has the instruments and mandate to push each of these levers.

Fourth, champion of globalization. Free trade and the movement of people is central to India’s development agenda. The West can probably afford to retreat behind tariff walls, but India cannot. Of course, reversing the de-globalization currently underway is a tall task, but great nations undertake great tasks.

These are some examples of the kind of thinking we need to tackle the employment challenge. So far, growth, migration and democracy have helped India avoid the kind of social unrest that accompanies widespread unemployment. There are limits to these tampons and it’s best not to take them for granted. The government has its work cut out for it.