India celebrated 77 years of independence last week. By its centennial, in 2047, Prime Minister Narendra Modi wants the country to become a “completely developed nation”. Based on current trends, however, it could take another 75 years for India just to reach one-quarter of America’s income per capita, according to the World Bank. To change the arithmetic, India must capitalise on its labour force — one of the youngest and largest in the world.
A vast labour supply of over half a billion is both an opportunity and a challenge. It can support economic growth, provided there are enough worthwhile jobs to fill. But it also brings huge political pressures, as Modi found out after his Bharatiya Janata party lost its parliamentary majority in a shock election result in June. The vote reflected rising frustration over the lack of well-paid work opportunities. Rising food prices made matters worse. The jobless rate averaged around 8 per cent in the 12 months to June.
India’s jobs challenge is stark. A recent study by Natixis, a bank, estimated that the country needs to create 115mn jobs by 2030 to absorb its growing population. That means the economy producing 16.5mn jobs per year, a significant step up on the 12.4mn annual average for the last decade.