India's 7% Growth Insufficient To Close Job Gap: Citi

According to Citi's analysis, India must generate approximately 12 million jobs annually over the next decade to accommodate new entrants into the labour market

The economists highlighted that the quality of jobs created in India remains a significant challenge (Image Source: Pexels)

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India will face challenges in generating sufficient jobs for its expanding workforce in the next decade, even with a robust economic growth rate of 7 per cent, according to Citigroup’s report. The report underscores the need for more focused efforts to enhance employment opportunities and skill development in the world’s most populous nation.

According to Citi's analysis, India must generate approximately 12 million jobs annually over the next decade to accommodate new entrants into the labour market. However, with an anticipated growth rate of 7 per cent, the country is expected to create only 8-9 million jobs annually, as noted by economists Samiran Chakraborty and Baqar Zaidi in their recent study, reported Bloomberg.

The economists highlighted that the quality of jobs created in India remains a significant challenge. Official data analysis reveals that approximately 46 per cent of the workforce is still engaged in agriculture, despite the sector contributing less than 20 per cent to the gross domestic product (GDP). In contrast, manufacturing accounted for 11.4 per cent of total employment in 2023, a lower proportion compared to 2018, indicating that the sector has yet to fully recover since the pandemic.

Furthermore, the proportion of individuals employed in the formal sector has decreased, standing at 25.7 per cent in 2023, the lowest recorded level in at least 18 years, according to Citi. Approximately 21 per cent of India's workforce, equivalent to around 122 million people, are engaged in jobs with regular salaries or wages, a decrease from 24 per cent before the pandemic. The data also indicates that more than half of India's 582 million workers are self-employed. 

The official unemployment rate of 3.2 per cent understates the magnitude of the issue, with many economists preferring data from the Centre for Monitoring Indian Economy (CMIE), a private research firm, pegged the unemployment rate at 9.2 per cent in May, the highest in eight months. Among those aged 20-24, the unemployment rate exceeds 40 per cent, according to CMIE data.

Joblessness, particularly among youth, emerged as a significant concern among voters in recent elections as well.