Policy Watch: Growth with Employment – September 2023

This issue of Policy Watch deals with the theme Growth with Employment. In particular, it focuses on the pressing issue of unemployment. India, with nearly 50 crore workers, has the second-largest labor force in the world. The country is on track to become the third-largest economy by 2028, overtaking Japan and Germany. However, despite strong growth projections, the Indian economy is struggling to absorb the large number of new entrants into the workforce.

Over 42% of young workers are unable to find employment in their desired field, contributing to an alarming total of around 7 crore unemployed youth.

The first article, India’s Demographic Dividend, by Prof Santosh Mehrotra, provides a detailed analysis of how this situation emerged, especially in the last decade. He contrasts this with the earlier period of 2000–2012, which saw both high growth and high employment. His article delves into the factors that have caused this reversal, offering valuable insights into the dynamics of India’s labor market.

The second article, by the undersigned, attributes rising unemployment amidst moderate GDP growth to the exploitative structure of the Indian economy, particularly its integration with the global economic system. The article proposes a visionary transformation to a nurturance-based economy, where both human and natural resources are cared for rather than exploited. Specific policy recommendations include significantly increasing the human development budget—covering nutrition, health, education, and skills—and improving program management for better outcomes.

On the natural resource front, the author advocates for a massive investment in the regeneration of Jal, Jangal, and Jameen (water, forest, and land). This would not only enhance natural productivity but also create MGNREGA-style employment in the short term, followed by long-term employment gains in the primary sector.

The third article, by Yuvraj Kalia, former RGICS Fellow, focuses on Uttar Pradesh, India’s most populous state. He argues that UP should aim to double its employment from 5 crore to 10 crore while striving to quadruple its GSDP to one trillion dollars. He identifies five key sectors as high-potential areas for employment generation in the state.