India's high growth rate will not solve high unemployment

India’s high growth rate will attract more foreign investors into the stock market but will not create mass jobs to solve the problem of high unemployment. As per HRD ministry projection, 141.3mn people will be in the age group of 18-23 in 2015. I am giving below the table of “India’s projected population for different age group-2015”

Source: Ministry of Human Resources Development

In the last 10 years, mere about 15mn jobs were created when annual GDP growth rate averaged 7.5%. This means the average job creation rate was 1.5mn per year. India’s population is 1.25bn people with large number of poor people as 40% or about 500mn people still live on less than 2$/day. So the aim of growth should be poverty alleviation with job creation. Look at the scenario when about 141.3mn young people in the age group of 18-23 come into the job market and only 1.5mn jobs are available (looking at the past record) which is merely 1% of actual requirement. Out of this, about 20% or 28mn people complete college education and look for high paying jobs in organized sector.

Assuming the new government with strong vision and sound policies will be able to push up India’s annual GDP growth rate to 10% (which is not going to happen till at least 2017 in my view) and maintain at that level (which is other utopian scenario where we assume that world and life goes at the constant speed in straight line with no bumps and no unexpected turns), then also about 20mn jobs would be created over next 10 years. At the same time, population of job seeking young people would increase by about 16mn during the same period assuming population growth rate of 1.2%. So India will need to create at least 8 times more jobs. Seems very daunting!!

In my view, there are few things which a government can do to reduce unemployment. Government should encourage small businesses by easier policies and easier access to finance which will help in creating more entrepreneurs and less job seekers. It should focus on improving agricultural sector and agro based economy as it employs at least 50% of India’s population directly and indirectly and it can provide jobs to people on mass scale. As a society, we should practise dignity of labour and that there is no shame in doing labour or manual work because Indian mind set is such that a person should work only in office after college education even if that education is practically useless and imparts zero knowledge and skills for such work. Government should also try to export manpower to all over the world which can be achieved by including teaching of more foreign languages in the school education system making it easier for more people to find jobs abroad. The last but not the least is controlling and taking serious measures to reduce India’s population growth which for many is “Demographic dividends and all such blah blah” but I firmly believe it’s the single biggest problem and sooner the realization, the better. Demographic dividend can happen only after people get work and money otherwise the same population and demographic become huge problem in form of social tension, increased crime rates, riots, and violence, etc. because of poverty. So if India aims for return of its historical golden period then it should go for population degrowth ;)