India will overtake China this year to become the world’s most populous country. The likelihood of India passing that major milestone within a few months shot up Tuesday, when China reported that its population shrank in 2022 for the first time in more than 60 years.
Demographic Dividend
For India, what economists and analysts call the “demographic dividend” could continue to support rapid growth as the number of healthy workers increases. There are fears the country might miss out, however. That’s because India is simply not creating employment opportunities for the millions of young job seekers already entering the workforce every year. The South Asian nation’s working-age population stands at over 900 million, according to 2021 data from the Organization for Economic Cooperation and Development (OECD).
This number is expected to hit more than 1 billion over the next decade, according to the Indian government. But these numbers could become a liability if policymakers do not create enough jobs, experts warned. Already, data show a growing number of Indians are not even looking for work, given the lack of opportunities and low wages. India’s labor force participation rate, an estimation of the active workforce and people looking for work, stood at 46%, which is among the lowest in Asia, according to 2021 data from the World Bank. India’s unemployment rate in December stood at 8.3%, according to the Centre for Monitoring Indian Economy (CMIE), an independent think tank headquartered in Mumbai.
Not Everyone Is an Engineer
Lack of high quality education is one of the biggest reasons behind India’s unemployment crisis. There has been a “massive failure at the education level” by policymakers, said Sripada, adding that Indian institutions emphasize “rote-learning” over “creative thinking.” As a result of this toxic combination of poor education and lack of jobs, thousands of college graduates, including those with doctorates, end up applying for lowly government jobs, such as those of “peons” or office boys, which pay less than $300 a month.
Asia’s third largest economy also needs to create more non-farm jobs to realize its full economic potential. According to recent government data, more than 45% of the Indian workforce is employed in the agriculture sector. The country needs to create at least 90 million new non-farm jobs by 2030 to absorb new workers, according to a 2020 report by McKinsey Global Institute. Many of these jobs can be created in the manufacturing and construction sectors, experts said. With a 6.8% expansion in GDP forecast for this fiscal year ending March, the South Asian nation is expected to be the world’s fastest growing major economy. But, according to a former central banker, even this growth is “insufficient.”
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Source: EditionCNN
