India Will Struggle To Create Jobs Even With 7% Growth Rate: Citigroup

Despite its impressive GDP growth rate of over 8% in FY 2023-24, India faces massive challenges in job creation over the next decade.

According to a Citigroup Inc. report, even with a sustained 7% economic growth rate, the country will struggle to provide sufficient employment opportunities for its expanding workforce.

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According to Citigroup's economists, Samiran Chakraborty and Baqar Zaidi, India will need to generate around 12 million jobs annually over the next 10 years to match the labor market's demand. On the other hand, a 7% growth rate will only result in the creation of 8 to 9 million jobs per year, leaving a deficit of 3 to 4 million jobs annually.

This gap indicates that economic growth alone will not be sufficient to absorb the new entrants into the labor market.

The report highlights the challenges of creating high-quality jobs in India, as per Bloomberg. Official data shows that nearly 46% of the country's workforce is still employed in agriculture, a sector that contributes less than 20% to the GDP.

This discrepancy indicates a major inefficiency in labor allocation. Furthermore, the manufacturing sector, which is vital for economic growth and job creation, accounted for only 11.4% of jobs in 2023, a decline from the levels seen in 2018.

To address these challenges, Citigroup's economists suggest a few steps:

Enhance manufacturing exports: Strengthening the export potential of the manufacturing sector can improve job creation. This involves pushing infrastructure, reducing regulatory hurdles, and providing incentives for manufacturers to scale up their operations and compete globally.

Fill government vacancies: The government should expedite the process of filling nearly one million existing vacancies in various departments. This will not only provide immediate employment opportunities but also improves the efficiency of public services.

Consolidate employment programs: There are multiple employment generation programs in India, and consolidating them could lead to better coordination and effectiveness.

Attract foreign investment: Extending incentives to attract foreign companies to set up operations in India can create a number of job opportunities.