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Last Updated : Oct 14, 2018 12:17 PM IST | Source: Moneycontrol.com

Despite clocking 7% GDP growth, employment up only 1%: Azim Premji University study

Despite being the fastest growing economy in the world, the correlation between economic growth and job creation is on a steady decline

India might be the fastest growing economy in the world. However, with a one percent improvement in employment, the correlation between economic growth and job creation is on a steady decline.

A study conducted by privately-run Azim Premji University reveals that despite clocking in 7 percent growth, India is struggling to create jobs with just one percent employment growth.

In contrast, the 1970s and 80s yielded two percent gain in jobs with just 3-4 percent market expansion. The by-product is an unemployment rate that hit 5 percent in 2015, the highest in over two decades.


According to the research, titled 'State of Working India 2018', the primary reason is a mismatch between skills and 'good jobs'. The latter, which essentially includes formal employment with regular pay, accounts for only 17 percent of the country’s 467 million workforce.

“Simply put, higher growth has raised aspirations but has failed to generate the kind of jobs that will allow people to fulfil those aspirations. This obviously points to the issue being not only one of job creation but of the creation of decent and desirable jobs,” the research team led by Amit Basole wrote.

Ever since economic reforms were introduced in 1991 under Prime Minister PV Narasimha Rao, the growth rate in the country has averaged 7 percent. The latest recorded data suggests that GDP grew 8.2 percent in three months through June from a year earlier, making India the world’s fastest-growing economy.

Nonetheless, the employment rate is on a constant decline, especially among young educated Indians. The study revealed that more than 33 percent of the 23 million citizens actively searching for jobs are graduates or have higher education.

The failure to foreclose the lack of job opportunities for the youth will not only hurt Prime Minister Narendra Modi's re-election bid in the forthcoming Lok Sabha elections but will also impede the economy’s current pace of expansion.

“India’s employment situation and the state of its labour statistics are both subjects of national news. The performance of the present government on job creation is also expected to be a key issue in the upcoming general elections in 2019,” the researchers said.
First Published on Oct 14, 2018 12:17 pm