India, the second most populous country in the world, is also the 5th largest economy in the world. According to the Governor of the Reserve Bank Of India, Shaktikant Das, the country is projected to grow at an average rate of 7.2%. Looking at the growth of the Indian economy in FY 2024, it’s safe to say that India will be one of the top three economies in the world by 2047. According to the government of India, the country saw a 7.8% in Q1 of FY 2024. This trend continued in Q2 and Q3 of FY 2024, with 7.6% and 8.4% growth respectively. This is the highest growth of any country in the world. Moreover, the FDI or foreign direct investment has also increased significantly in the last 10 years or so. According to the World Investment Report 2023, India saw the third-highest FDI in the year 2021-2022. The same report also mentions that the total FDI in India in the last 10 years amounts to around $647.96 billion, which came from 170 different countries and has been invested in all 33 UTs and states and across 63 sectors.
However, the high unemployment rate has plagued India for the last few years. According to the Centre for Monitoring the Indian Economy, around 81% of the workforce in India, or 8.1% of the total population, is unemployed. This is a huge roadblock to India becoming a developed economy. This is simply because the lack of quality jobs can affect the economy negatively. To find the GDP of any nation, economists use a formula that is Y = C + I + G + (X − M). Here, Y denotes the GDP, C denotes the purchasing power of the public, I denotes the investment in the country, G denotes government expenditure and investment in public infrastructure, and X-M denotes the net exports. Here, C denotes the purchasing power of the citizens, which can only be increased with quality jobs. When people earn more, they spend more, and that drives the economy up. This is why quality jobs are important for a growing economy to become a developed economy. Looking at the employment rates of developed countries might paint a better picture. Four of the biggest economies in the world, the USA, China, Germany, and Japan, all have an employment rate of 70.5%, 75.1%, 76.8% and 78%, respectively.
But why is this the case? Why can’t the Indian government provide its citizens with quality jobs? The main reason is the skill gap. The workforce of the country possesses skills that are not upto par with the demand of the industries. Most of the unemployed people do have a degree but don’t possess the skills required to fill a job role. Another reason is the rapidly growing population of the country. India has recently surpassed China to become the most populous country in the world. The slow growth of the manufacturing sector in India has also contributed to the high unemployment rates. The manufacturing sector is necessary for any country as the sector has always been labour-intensive and employs many people.
However, the government of India addresses these issues through skill development programs and schemes. The Indian government’s “Skill India” initiative was a step towards decreasing the skill gap in the workforce and imparting the basic skills needed in today’s work ecosystem. Another scheme started by the government is Pradhan Mantri Kaushal Vikas Yojana. This scheme provides skill development courses to unemployed workforce from various sectors. According to data from the government of India, around 12.4 million or 1.24 crore Indians have benefitted from this scheme. Moreover, the Mahatma Gandhi National Rural Employement Gaurantee Scheme or MGNREGS, has provided employement to over 8.2 crore people in 2022-2023, as per reports by the Press Information Bureau of India.
All of the data points at a similar direction, upwards. If the Indian government keeps providing skills, jobs and employement oppurtunity to its citizens, the growth of India will be monumental. The manufacturing sector of India needs to grow a lot to cater the growing demand of employement in the country.
