By Bibhudatta Pradhan
India’s youth employment landscape points to a deepening crisis in the world’s most populous nation. Young individuals aged 15 to 29 years constitute 83% of the country’s unemployed population. The situation is particularly dire for the educated, with the unemployment rate for graduates standing at a staggering 29.1%, almost nine times higher than the 3.4% for those who can’t read or write. This alarming disparity was highlighted in a report by the International Labour Organisation and the Institute of Human Development.
Moreover, nearly a quarter of the nation’s youth are not engaged in education, employment or training, according to the World Bank. This inactivity has led some to be drawn into crime and violence. In 2022, frustrated young people faced bleak job prospects, blocked rail traffic and highways, and even set some trains on fire. In 2024, over 5.5 million students –including BTech, MBA and master degree graduates– applied for junior-level positions such as peon, watchman and gardener in Uttar Pradesh, underscoring growing desperation among students seeking government jobs.
Yet, industries frequently complain about a shortage of skilled workers. While India’s universities and colleges have produced chief executive officers at companies from Microsoft Corp. to Alphabet Inc., many rapidly expanding private institutions fail to produce enough graduates with employable skills as colleges lack adequate infrastructure, qualified faculty, and practical training or job placements.
The situation has reached a critical point as the world’s fastest-growing major economy struggles to create enough jobs for its large and youthful population.
Government jobs, highly sought after by students, remain extremely limited—comprising only 2 out of every 100 jobs. Offering lifelong security, health benefits, and pensions, even low-paying government jobs attract significant interest. According to government data, 170 million jobs were created during 2017 to 2023. However, economists argue that much of this growth was in self-employment and temporary agricultural work rather than in formal, stable positions.
The private sector has also failed to generate enough jobs to absorb the millions of graduates entering the workforce every year. Low-skill manufacturing units, which could potentially employ large numbers of young people—who make up around 50% of the population— are similarly constrained in their ability to provide significant employment opportunities.
Despite these challenges, the government has reported a significant drop in the overall unemployment rate, from 6% in 2017–18 to 3.2% in 2023–24. The unemployment rate among youth aged 15 to 29 years has also decreased from 17.8% in 2017-18 to 10.2% in 2023-24, according to Minister of State for Labour and Employment Sushri Shobha Karandlaje, in Parliament reply on Dec. 16. She emphasized that employment generation, coupled with improving employability, remains a priority for the government.
However, while the government cites various data indicating progress in job creation, the broader challenge of generating sustainable employment continues to loom large.
Facing electoral pressure, the government launched an employment-linked incentive scheme in September aimed at boosting job creation. Under the initiative, first-time job entrants into the formal sector will receive a direct cash transfer equivalent to their monthly salary, capped at 15,000 rupees, alongside their first month’s wage. Additionally, two more programmes have been introduced to promote manufacturing jobs, offering employment-linked incentives to both employees and employers. Another program aims to provide internship opportunities to one crore young people in the top 500 companies in five years.
The success of this initiative will be known later. So far, the response from companies has been less enthusiastic than anticipated. Many businesses are hesitant to expand their workforce based solely on government incentives, especially in an uncertain economic climate.
Privately, some company executives have indicated they will only hire the number of employees required, without increasing headcount simply to qualify for incentives. The government, however, is likely to count every subsidy payment as additional hiring. Given the difficulty of assessing what hiring levels would have been without these subsidies, the official statistics are unlikely to face scrutiny.
As a result, the government may still be able to claim the program’s success, even if the actual impact on job creation is limited. However, the initiative may not fully address India’s unemployment crisis. Its effectiveness hinges on addressing deeper structural issues such as skill development, sectoral growth, and the creation of a more favourable business environment.
Without simultaneous reforms in education, infrastructure, and industrial policy, the scheme risks becoming a temporary fix rather than a long-term solution to India’s enduring employment challenges.
(Bibhudatta Pradhan is a senior journalist based in New Delhi.)