Policy Experts Identify Job Creation As India's Foremost Economic Hurdle

Some economists also emphasised the critical role that businesses must play in effecting substantial changes in employment

Addressing the country's persistent unemployment will be the foremost challenge for the government in the coming five years, despite the nation retaining its status as the fastest-growing major economy globally, according to Reuters' survey of policy experts.

In the survey, a whopping 91 per cent of development economists and policy experts—precisely 49 out of 54 respondents—identified unemployment as the paramount economic challenge facing the government during its term.

In recent national elections, which concluded in early June, Prime Minister Narendra Modi's Bharatiya Janata Party lost its decade-long parliamentary majority. The defeat was attributed to escalating inequality, persistent inflation pressures—especially on essential food items—and a shortage of lucrative employment opportunities even after the economy expanded by over 8 per cent last fiscal year.

"In India, we have a very peculiar problem - supposedly very high aggregate growth rates and no increase in employment. Modi came to power offering aspirational youth jobs and a better life, but it's gotten significantly worse since then," said Jayati Ghosh, professor at the University of Massachusetts Amherst.

"You have to have a job-specific strategy ... You have to dramatically increase public employment in basic social services, health, education, nutrition, sanitation," Ghosh added.

The BJP has acknowledged that employment played a role in the election and stated that "whatever best can be done is being done" to address the issue.

Some economists also emphasised the critical role that businesses must play in effecting substantial changes in employment.

"Government alone cannot possibly create the jobs required to absorb the millions entering into the workforce every year. That requires the private sector to step up with high, sustained investment," said Rajeswari Sengupta, associate professor of economics from the Indira Gandhi Institute of Development Research in Mumbai, in the report.

"The government needs to identify impediments to private investment, remove policy hurdles and obstacles holding back a revival ... and let the private sector do its job with minimum government hindrance," Sengupta added.