Is it GDP or rising unemployment that is critical in India today? What does the future look like, and what is the biggest challenge before India in the coming year?

As if it was not enough that there is a spurt in coronavirus cases in the country, adding to the common person’s troubles is the rising unemployment rate and a continuous rise in fuel prices and inflation.
The argument between employment and economic growth – GDP is perhaps the most widely contested issue in national strategies.

It is thought that there is a direct relationship between the employment rate and that it should be proportional to economic growth and GDP. Creating incomes and job opportunities is crucial for development, thereby GDP, and for a developing country such as India, it is critical.

Characteristically, fast economic growth takes care of unemployment worries, but one cannot assume the same in India. Data has shown that in India, employment and GDP ratio share an inverse relationship in the Indian economy.
In India, employment is still relatively unstructured because a large part of the workforce is in the unorganized sector. The prevailing notion that GDP growth alone can generate employment is not valid.

As of today, one of the major crises that is being faced by the Indian population is the loss of jobs or pertaining to employability.
Covid -19 pandemics has clearly established that the need of the hour for the general population is concerning employment, and this has also been the most talked about problem and top Twitter trends currently.

The hashtag “#modi_rojgar_do” has already seen over two million tweets and clearly shows the most difficult challenge that this country’s citizens are facing.
One would think that the problem of Unemployment in India is a recent and a result of the Covid -19 pandemic, but let me clarify that is not the case entirely.

If we look at the data, at the end of the financial year 2019-20, there were around 403.5 million employed people and an estimated 35 million openly unemployed people in the country. India adds to this pool roughly 10 million new job seekers each year.

However, the fact is that several million have consistently lost jobs, and as of January 2021, India has only about 400 million employed; consider these figures against the total population of India – 136.64 crores as of 2019.
What these figures point to is this – even before the pandemic hit – the employment situation in the country was getting worse.

Add to this the total number of people who have lost their jobs due to the Covid -19 pandemic; if the total number of unemployed people before the pandemic stood approximately at 35 million, add to this number of unemployed people due to the covid -19 crises, the number presently would be anywhere between 40 to 45 million.

The dynamics only gets complicated from hereon; let’s imagine each household has an average of one employed person, today if that one employed person has lost his job, then the consequences of the same as part of the larger family is enormous. This implies that millions of families are suffering due to a lack of employment opportunities.

Another point in consideration here is that of these 45 million people, it only captures the openly unemployed people – i.e., those who are actively seeking employment but not finding it; thus, the actual problem of unemployment is a much bigger issue.
Hence, the rise in GDP is not going to actively solve the problem of Unemployment in India. The reason for the same is that past data has shown that irrespective of a rise in GDP, the nature of its growth in India is such that it has been able to produce a minuscule number of well-paying jobs.

However, the problem today that largely looms over the country is not just a question of well–paying jobs but also the fact that many have lost their jobs because of the Covid – 19 led devastation in the overall job market in the country.

The mood in the country towards economic growth is optimistic; in the coming financial year, India’s GDP growth is expected to show a sharp rebound; however, none of that will actually change the one-sided manner in which India grows. The GDP is expected to grow and will rise as more and more companies resume their operations and become more productive by replacing labor with capital (machinery), but that will only hasten to deepen India’s unemployment problem.

Another worrying aspect is that as the private sector opens, in order to boost their profits post covid, the private sector has already started to trim its workforce. This will most likely be the trend at least in the coming quarters; hence, it will not be surprising if the private sector also shies away from hiring fresh candidates for the next couple of years. Also, simultaneously waiting for Indian’s to regain their purchasing power.

The government, too, has not shown any incentives to tackle this problem; the Union budget for 2021-22 has clearly indicated that the government will not be the prime mover in the economy. Hence, the government’s role in directly creating jobs owing to its “minimum government” policy is going to have a significant striking effect on the overall unemployment problem as it would not be actively creating new jobs.

In the meantime, though gaining momentum, the private sector is not likely to solve the issue of unemployment as it would be playing a “wait and watch” game to book profits. Meanwhile, the government, too, has shown that it wants minimums involvement when it comes to creating new jobs; this leaves the population of the country vulnerable.

The challenge is not only for the younger population who are unemployed and disillusioned but also for those who are in the middle age group and beyond; for them, the challenge is in terms of redundancy of their roles in the current environment.
Hence the challenge of unemployment is critical in India and will continue to be one of the major challenges in the times ahead.

One can only hope and pray that the problem of unemployment eases as millions of families are already suffering due to the current crises. The government, too, must give due importance to this rising crisis; it is for the youth of the country and for those who are already laboring because of the fall out in the economy.

Take care