India’s unemployment paradox in a booming economy

This article is authored by Monica B Sood, chairperson, National Unity and Security Council.

With its gross domestic product (GDP) growth story, a booming start-up ecosystem, and an ever-rising manufacturing sector, India is on the brink of becoming one of the most powerful economies in the world. But the looming issue of unemployment needs to be addressed. Paradoxically, as the Indian GDP transits to become the fifth largest in the world, millions are either unemployed/necessary. The government has achieved various milestones in terms of infrastructure, digitalisation, but self-sufficiency through Atmanirbhar Bharat, unemployment requires out-of-the-box solutions.

Unemployment makes you spiral out of control.(Pexels)

The government’s Make in India and Production Linked Incentive (PLI) Schemes have revitalised domestic manufacturing, yet the pace of job creation has been slow. The challenge now is to transition from a jobless growth model to one that integrates employment at its core. Industries like Information Technology (IT), fintech, and pharmaceuticals have soared, they are not for the unskilled worker leaving behind hundreds of thousands of semi-skilled and unskilled workers. In addition, structural changes such as dwindling agricultural employment, fading traditional manufacturing have only worsened the crisis.

While conventional strategies such as skill development programmes and start-up incentives are necessary, India requires unique interventions that align with its socio-economic fabric. Here are some innovative approaches the government could adopt:

· Rural gig economy hubs--Platforms such as Zomato, Ola and Swiggy have created millions of jobs for India's urban gig economy But, there is a great potential market in the rural economy still lying ignored. Approval economic initiatives could lead to government establishment of rural gig economy hubs that enable local artisans, farmers and service providers to access digital marketplaces. A farmer using digital platforms like Amazon and Flipkart to integrate rural workers into the national supply chain would simply lessen the reliance on seasonal agricultural work.

· Mandatory ‘work-skills rotation’ for graduates--There is a large disconnect between what the industry wants and the skill set that is actually available after graduation. One alternative could be the introduction of a National Work-Skills Rotation Programme that could require youths to complete a formal rotation through three essential areas—manufacturing, services, and digital economy—before securing full-time work. This would enable experiential learning, create flexible graduates and reduce the skill gap.

· Micro-entrepreneurship incentives via blockchain-based credit-- Small-business loans are encumbered with red tape and collateral in the traditional way. Yet another move that the Modi government could make is to implement blockchain-based credit System for micro-entrepreneurs resulting in transparent UI loans granted at near-zero interest and with no bureaucratic bottle-neck. Street vendors, craftsmen and small manufacturers would be making use of smart contracts for direct transactions, minimising fraud in the process and empowering them.

· Skill mandis to replace traditional employment exchanges--Most of the employment exchanges in India are antiquated and do not perform up to their potential. Replacing them with skill mandis would be a radical departure--these are physical and digital marketplaces that facilitate peer-to-peer engagements between people with skills and employers. These hubs will operate like normal mandis though but instead of agricultural goods, they will enable on-demand hiring of skilled and semi-skilled labour.

· Artificial Intelligence (AI)-powered employment forecasting and regional job mapping-- One of the main hurdles with regards to unemployment is that while there is often a shortage of qualified workers in certain areas, the suitable economic climate for doing so may not exist in other places. Governments could rollout AI-powered employment forecasting systems that predict where and what jobs will be in demand among states and labour sectors. Such systems could help direct the workforce to newly developed clusters of work, more evenly distributing jobs throughout the country.

· Leveraging space and defence industries for mass employment-- India's space and defence sectors are on an upward trajectory, and this is expected for a long time, that is why the Indian Space Research Organisation and Make in India defence initiatives are popular globally. Yet these areas remain extremely niche. An end to-end space and defence skilling mission can prepare semi-skilled workers to assemble components, manage logistics, and operate peripheral systems, and integrate them into high-tech industries sans requiring degrees.

This will be the third pillar that the government has started to expand, in its culture or manner to make India Atmanirbhar in the economy - and the task of job creation will have to be done with almost equal vigour as in the case of industry. The strategies described above are centred around decentralisation, automation and skill disruption - all of which can bring the economy and the workforce closer in the process of expansion.

This article is authored by Monica B Sood, chairperson, National Unity and Security Council.