Analyzing the Employment-Generation Needs in the Indian Economy

Analyzing the Employment-Generation Needs in the Indian Economy

Analyzing the Employment-Generation Needs in the Indian Economy


The dive into the employment requirements of the Indian economy, questioning whether the proposed job creation targets are sufficient to address the nation’s unemployment crisis.


GS-03 (Indian Economy, Growth and Development)


  • Prime Minister Employment Generation Program (PMEGP)
  • E-Shram Portal

Mains Questions:

  1. How does the current population growth rate impact the labour force in the context of employment generation? (150 words)

Dimensions of the article:

  •  Analyzing the Impact of Population Growth on the Labour Force
  • Assessing the Relevance of Birth Rate to the Potential Workforce
  • The Dominance of the Unorganized Sector and Its Implications

Analyzing the Impact of Population Growth on the Labour Force

  • The government-affiliated economists contend that the current population growth rate is inconsequential to the growth of the labour force. However, this viewpoint demands scrutiny.
  • The labour force, comprising individuals aged 15-64 actively seeking employment, experiences the effects of population growth with a delay of 15 years. Those born in earlier years, such as 2003-04, are now entering the labour force after completing their high school education and individuals pursuing higher education or preparing for various exams may not immediately join the labour force.
  • It is essential to recognize that most individuals, particularly those from lower-income backgrounds, cannot afford prolonged unemployment. Moreover, social pressures on middle-class individuals necessitate their entry into the workforce, barring a few who venture into entrepreneurship due to limited capital and required skills.

Assessing the Relevance of Birth Rate to the Potential Workforce

  • In evaluating the potential workforce, the birth rate takes precedence over the population growth rate. Population increase primarily stems from the difference between births and deaths. With life expectancy in India surpassing 70 years and higher child mortality rates, deaths among children under five years old significantly impact population growth. By subtracting deaths among young children from the total number of births, we can ascertain the potential number of individuals entering the labour force after 15 years.
  • Considering gender dynamics, where fewer women join the labour force due to social reasons, segregating the numbers between men and women becomes crucial. Applying the gender ratio of 1,068 men for every 1,000 women in 2022, we arrive at approximately 24,187,591 potential young people entering the labour force.
  • Although some individuals may prepare for exams, those who have already invested years in exam preparation would join the workforce.
  • It is worth noting that if ample employment opportunities were available, many would refrain from repeatedly appearing for these exams.
  • A fraction of the young population may choose to pursue work or studies abroad, but their numbers remain relatively small compared to the total potential workforce.

The Dominance of the Unorganized Sector and Its Implications

  • The unorganized sector constitutes a significant portion of the Indian labour force, with the organized sector offering limited job prospects due to mechanization and automation.
  • In fact, approximately 94% of the labour force engages in the unorganized sector, often earning meager wages. Notably, the e-Shram portal registered 280 million individuals in November,2022, and a staggering 94% reported earning less than ₹10,000 per month.
  • As the organized sector grows at the expense of the unorganized sector, unemployment rates rise. Unemployment manifests in various forms, including unemployment, underemployment, disguised unemployment, and individuals who have given up on finding employment.
  • Simplified assumptions reveal that around 286 million individuals require stable employment, primarily stemming from the unorganized sector. Alarmingly, only 332 million individuals currently hold steady jobs, with a significant portion also operating within the unorganized sector.
  • These figures underscore the insufficiency of creating jobs for a mere 5 million-8 million young individuals, in tackling India’s unemployment problem.

Way Forward:

To effectively address the employment crisis in India, a multifaceted approach is essential. Policymakers should consider the following measures:

  • Encourage skill development: Emphasize vocational training programs to equip individuals with in-demand skills and enhance their employability in various sectors.
  • Promote entrepreneurship: Establish supportive mechanisms, such as access to capital, mentoring, and simplified regulatory frameworks, to foster a culture of entrepreneurship and encourage job creation.
  • Strengthen the organized sector: Implement policies to foster growth and innovation in the organized sector, leading to increased job opportunities and higher wages for workers.
  • Improve labour market information: Enhance data collection and analysis to better understand labour market dynamics and align educational and training programs with industry requirements.
  • Foster inclusive growth: Prioritize policies that target marginalized communities, women, and rural areas to ensure equitable access to employment opportunities.


The employment-generation needs of the Indian economy far exceed the proposed targets of creating jobs for a limited number of young individuals. By analyzing the population growth rate, birth rate, and dominance of the unorganized sector, it becomes evident that a comprehensive and holistic approach is necessary to address the nation’s unemployment crisis. Policymakers must prioritize skill development, entrepreneurship, and the growth of the organized sector while fostering inclusive and sustainable economic growth. Only through concerted efforts can India pave the way towards meaningful employment opportunities for its burgeoning workforce.