Amidst the bustling markets and burgeoning growth, India’s economy faces a pressing challenge: unemployment. As the country gears up for elections, economists weigh in on the nation’s economic trajectory, highlighting concerns about job creation and its impact on the world’s fastest-growing economy.
The Elephant in the Room: Unemployment
In a recent Reuters poll, economists unanimously pointed to unemployment as the foremost economic hurdle for India, even as the nation boasts a robust growth forecast of 6.5% for the fiscal year. Despite rapid expansion, job creation has failed to keep pace with the burgeoning young workforce, leaving a significant portion of the population grappling with joblessness.
A Decade of Jobless Growth
Analysts underscore the persistent challenge of “near jobless growth” plaguing India’s economy. Kunal Kundu, an economist at Societe Generale, notes the decline in the labor force participation rate, signaling a concerning trend in the job market. The government’s focus on traditional employment drivers like infrastructure and manufacturing has yielded limited results, raising doubts about the efficacy of current strategies.
Political Promises vs. Reality
Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) rode to power in 2014 on promises of job creation. However, despite initiatives aimed at bolstering employment, the unemployment rate has remained largely stagnant over the years. While capital expenditure initiatives have fueled economic growth, the benefits have yet to trickle down to the labor market, leaving many disillusioned with the status quo.
Challenges Amidst Growth
India’s economy surged unexpectedly in the October-December quarter, propelled by government-led investments. However, sustaining this momentum amidst fiscal constraints poses a formidable challenge. Alexandra Hermann of Oxford Economics warns against complacency, emphasizing the need for fiscal prudence in the face of uncertainty.
Optimism Amidst Uncertainty
Despite prevailing challenges, economists express cautious optimism about India’s economic outlook. With international institutions like the International Monetary Fund revising growth forecasts upward, the consensus leans towards a more optimistic trajectory. However, concerns linger over potential inflationary pressures, signaling a delicate balancing act for policymakers.
Looking Ahead: Navigating Uncertain Waters
As India navigates the complex terrain of economic growth and job creation, policymakers face a daunting task. Balancing the imperatives of growth, employment, and inflation requires a nuanced approach, one that acknowledges the multifaceted challenges confronting the nation’s economy.
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Credit : Milounee Purohit