OPINION | Addressing the NEET challenge in India’s youth population

More than 16 million youth have been trained and about 13 million certified – thereby enhancing overall employability in India.

India has one of the largest youth populations (aged 15-29 years) in the world with 371 million young people – a true demographic advantage. According to estimates of the Ministry of Statistics and Programme Implementation (MoSPI), 25.6 percent of this population was not in employment, education or training (NEET) in 2022-23. Further disaggregating the data, about 8 percent of young men and over 44 percent of young women fell into the NEET category, revealing a stark gender disparity.

While the figures are concerning, the overall trend offers optimism. Over recent years, both male and female NEET rates have declined. More women are entering the labour force and the ratio of educated women joining the workforce has been on the rise too. According to Periodic Labour Force Survey (PLFS) data, male NEET rates (aged 15-24 years) dropped from roughly 14% in 2017-18 to around 8% in 2023-24, and female NEET rates declined from more than 45% to about 34% over the same period.

Understanding the Gender Gap: While the gender gap in NEET rates is explained by deeply entrenched socio-economic and cultural factors, there is another dimension to it. Research shows that more than 78 percent male NEETs in India were actively seeking jobs and therefore counted as part of the labour force, as compared to about 5 percent of the female NEETs. On the other hand, more than 90 percent of the female NEETs were engaged in household responsibilities - neither studying nor training. Consequently, they remained out of labour force, pointing to a major structural challenge to women’s participation in productive economic activities.

An Important Growth Driver: Integrating the young men and women with the productive labour force of the country can be an important growth driver. As more education and training activity takes place, and more skilled people join the workforce, it will attract more investments, enhance income and consumption levels in the economy, and so on. Tapping this left-out demographic potential would thus be a significant growth driver.

Policy Initiatives for Skilling India: India’s policy response has focused on enhancing employability though large-scale skilling initiatives. The Pradhan Mantri Kaushal Vikas Yojana (PMKVY) is one such flagship programme aimed at bringing standardization and recognition to short-term skill trainings for both urban and rural unemployed youth. In the last 10 years, more than 16 million youth have been trained and about 13 million certified – thereby enhancing overall employability in India.

Complementing this is the Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU GKY), which combines long-term skill training for rural youth to linking them to placement opportunities.

Strengthening the ITIs: For formal, long-term trainings, India strong network of about 15,000 Industrial Training Institutes (ITIs) remains a cornerstone of vocational education. Many state governments have forged public-private partnerships to enhance relevance to industry and to improve placement outcomes. For instance, ITI Durgapur collaborates with local industry, with most graduates finding jobs in the local steel and mining sectors. Similarly, ITI Angul in Odisha reports strong placement records, supported by collaborations with private corporates such as Tata Steel and ArcelorMittal. However, many more such partnerships are needed, particularly to improve infrastructure and quality of trainings in remote areas, for which Industry must be incentivised appropriately.

Pathways to international labour mobility: As more Indian youth are skilled and certified, they will find it easier to access legal pathways to international opportunities. Given the ageing populations of many developed nations, this is a great opportunity for India. It is estimated that about 24 percent of the incremental global workforce will come from India in the next decade.

Employment Creation and Incentivisation: Beyond skilling, the government has recently launched the Employment Linked Incentive (ELI) Scheme – Pradhan Mantri Viksit Bharat Rozgar Yojana (PM-VBRY), which is aimed at stimulating job creation. The scheme provides a one-month wage subsidy to support first-time jobseekers, supporting their learning curve. Additionally, it subsidises employers’ social security contributions for newly hired workers in both manufacturing and services sector.

The ELI scheme aims to support over 30 million jobs over next two years, with an estimated outlay of one trillion rupees - thereby seeking to strengthen employment generation, employability, and social security simultaneously.

Reforms Driving Youth Inclusion: At the macroeconomic level, India’s broader reform agenda reinforces youth participation in productive activities that generate employment. Some key measures include Ease of Doing Business (EoDB) reforms to attract investments; the Production Linked Incentive (PLI) Schemes to create a virtuous circle of investments and global manufacturing champions; Free Trade Agreements (FTAs) incorporating labour mobility provisions; besides alignment of National Skills Qualification Framework (NSQF) with global standards.

The Road Ahead: Turning Challenge into Opportunity: While the outcomes of declining NEET rates, improved employability and income outcomes are appreciable, concerns remain as several states still report over 45 percent young women (aged 15-29 years) outside the labour force. Facilitating female participation through workplace safety, trainings, child care provisions, other labour reforms will strengthen India’s growth trajectory. Converting this challenge into an opportunity will require the proactive involvement of policy makers, states, industry, and local leaders.

Vision for Regional Leadership: Youth NEET rates being a significant challenge facing many countries in ASEAN, India could assume regional leadership and establish a regional Youth NEET Observatory to monitor the NEET rates. Besides India could also enable knowledge exchange across nations in the region on skills and employment strategies. Leveraging on the demographic potential of the youth NEET population could be a game changer for India as it progresses on the path to a Viksit Bharat.