India needs to grow at 8-8.5% annually in the next decade in order to absorb workers set to enter workforce by 2030 or risk massive unemployment and economic stagnation.
In the next decade upto 2030, India needs to create at least 90 million new non-farm jobs to absorb the new workers set to enter the workforce by then based on current demographics, a report from McKinsey Global Institute said.
India needs to implement a sustainably fast track reform agenda in the next 12-18 months in order to grow at 8 to 8.5% annually, which is twice the current growth rate, in order to achieve the feat. If not, the county is set to face a decade of economic stagnation, the report titled ‘India’s turning point’ warned.
“Over the decade to 2030, India needs to create at least 90 million new nonfarm jobs to absorb the 60 million new workers who will enter the workforce based on current demographics, and an additional 30 million workers who could move from farm work to more productive non-farm sectors. If an additional 55 million women enter the labour force, at least partially correcting historical underrepresentation, India’s job creation imperative would be even greater,” the report said.
Owing to uncertainties due to Covid-19 pandemic and the steps taken to mitigate widespread reaction, the McKinsey analysis took into account scenarios from the beginning of 2023. The reforms to ensure it would have to be implemented in the next 12 to 18 months.
In order to do so, net employment would need to grow by 1.5% per year, rates which were witnessed during 2012-20 and much higher than “flat net employment” witnessed between 2013-18, it said.
“At the same time, India will need to maintain productivity growth at 6.5 to 7.0 percent per year, the same as it achieved from 2013 to 2018. The two objectives are not contradictory; indeed, employment cannot grow sustainably without high productivity