India needs to create 7.85 million non-farm jobs every year until 2030 to absorb its growing workforce amid new challenges such as artificial intelligence (AI), which could prove to be the “biggest disruption for future work”, the Budget-eve Economic Survey 2023-24, tabled in Parliament on Monday, said.
Adoption of AI is transforming the job market and India will not “remain immune to this transformation”, the survey said, calling for the government and the private sector to come together in a “grand alliance” to leverage such technology to reshape jobs, not replace them.
“Artificial Intelligence casts a huge pall of uncertainty as to its impact on workers across all skill levels – low, semi and high,” the review, authored by researchers, led by chief economic advisor V. Anantha Nageswaran, stated.
The review said AI technologies could even create barriers and hurdles to sustained high growth rates for India. According to an International Monetary Fund study, nearly 40% of current jobs will be exposed to AI globally. The study, quoted by the review, found that employment highly exposed to AI in India stood at 26%.
Citing a survey of 33000 firms, the review said corporate profits had “quadrupled” between FY20 and FY23 but they had not created enough jobs. “Hiring and compensation growth hardly kept up with it.”
{{/usCountry}}Citing a survey of 33000 firms, the review said corporate profits had “quadrupled” between FY20 and FY23 but they had not created enough jobs. “Hiring and compensation growth hardly kept up with it.”
{{/usCountry}}India’s unemployment rate declined to 3.2% in 2022-23, along with rising youth and female participation in the workforce, the review stated. It noted a surge in agricultural employment, partly explained by reverse migration to villages during the pandemic.
According to the review, the government’s annual and quarterly periodic labour force surveys (PLFS) show the country’s annual unemployment rate for persons aged 15 years and above by usual status or US, has been declining since the pandemic. US is a reference period during which if person is engaged in an economic activity for 30 days in the last 365 days preceding the survey, he or she is considered employed.
Citing the most recent PFLS, the review said the quarterly urban unemployment rate for people aged 15 years and above declined to 6.7% in the quarter ending March 2024 from 6.8% during the same period of the previous year.
The decline has been accompanied by increased worker population ratio, or the number of employed persons, and the labour force participation rate, which is the percentage of people employed as well as those looking for jobs.
To be sure, private-sector estimates of unemployment levels in the world’s fastest growing economy vary widely from the PLFS brought out by the statistics ministry. According to the data firm, Centre for Monitoring the Indian Economy, the country’s jobless rate was 9.2% in June 2024.
The survey said the care economy and food processing were two sectors with high job-creation potential. “To generate and sustain quality employment, agro-processing and care economy are two promising candidates, the latter also being a necessity for levelling the playing field for women in labour market.”
To meet the demand of 7.85 million jobs per year, there is “scope to supplement existing schemes”, such as production-linked incentives, which could yield 6 million jobs over five years and the MITRA textile scheme, which could create 2 million employment generation, the survey said.
“The lack of availability of timely data on the absolute number of (formal and informal) jobs created even at annual intervals, let alone at higher frequencies, in various sectors – agriculture, industry including manufacturing and services – precludes an objective analysis of the labour market situation in the country,” the review said.