India needs to create 115 million jobs by 2030 as more people enter the workforce, according to a study, emphasizing the need to boost services and manufacturing to sustain economic growth.
Asia’s third-largest economy will have to generate 16.5 million jobs annually, up from the previous decade’s 12.4 million per year, according to Trinh Nguyen, a senior economist at Natixis SA. Of these, about 10.4 million jobs will need to come from the formal sector.
“To achieve this Herculean task, India’s growth engine needs to fire on all cylinders, from manufacturing to services over the next five years,” Nguyen wrote in a research note.
Although India’s economy is expected to grow by more than 7% this year — one of the fastest rates globally — this pace is still not sufficient to create jobs for its 1.4 billion people. High youth unemployment remains a significant challenge for Prime Minister Narendra Modi as he seeks a third term in the upcoming national elections.
Despite the creation of 112 million jobs over the last decade, only about 10% of these are formal, Nguyen noted. India’s overall labor force participation rate is 58%, much lower than other Asian nations, according to the World Bank.
Nguyen pointed out that India’s services sector, which constitutes more than half of the GDP, has limited capacity for headcount growth and labor quality. Therefore, India can leverage the manufacturing sector to compete with firms and countries looking to diversify away from a China-centric supply chain.
“The incoming administration needs to jump on the manufacturing train and capitalize on demographic and geopolitical tailwinds,” Nguyen stated. “Even if the road forward is challenging, it is never too late to walk down the right path.”
Originally Posted on: https://www.business-standard.com/economy/analysis/india-must-create-115-mn-jobs-by-2030-as-more-people-enter-workforce-study-124052001062_1.html