As the Modi 3.0 government’s first full-fledged Budget approaches on July 23, the issue of job creation has sparked a heated debate. Economists are divided over the interpretation of publicly available data on how effectively the country has addressed unemployment.

While some economists, using government and RBI data, argue that India has performed well in job creation over the last decade, others contend that the official employment data primarily reflects increased opportunities in agriculture over the last few years rather than the creation of “formal jobs with regular wages”.

Jobless growth

This comes at a time when the RBI recently raised growth projection for economy for 2024-25 to 7.2 per cent from earlier 7 per cent. While critics are quick to claim that India is experiencing “jobless growth”, the government has cited EPFO data to buttress its point of increased job creation over the last five years.

The RBI on Monday said that the employment in the economy in FY24 for the fiscal year ended March 31, 2024 rose by 46.7 million to a total of 643.3 million, up from 596.7 million a year ago.

Low productivity jobs

Madan Sabnavis, Chief Economist, Bank of Baroda, said that one has to accept the numbers put out by the government and the RBI, rather than relying on private agency data disseminations. “The conclusion I draw is that job creation has happened, the numbers have gone up but to low productivity sectors like agriculture, construction and trade”, he said.

This is a clear pointer that policies have to concentrate on education and on making people better skilled so thatthey move into high productive jobs.

Sabnavis underlined that the share of manufacturing in employment has come down while it has gone up in low-productivity sectors like agriculture.

However, there is a strong contrarian view that India has actually done well in job creation.

Problem masked

T C A Anant, former Chief Statistician of India, said that the country has certainly performed better on the job creation front over the last decade. “I don’t agree with the notion that official data put out is masking India’s job problem. This is because the official data includes EPFO data. For the first time official data is showing rise in workforce participation rate (WPR),” he said.

“So the ones who were earlier pointing to fall in WPR as a sign of India not employing everybody are now saying that these people are working but not getting good jobs. The narrative has shifted,” Anant told businessline.

The bottomline of increased WPR is that more and more people are working in a space where the ILO wants to define “work”. 

“We are creating large job opportunities. Relative to our own history, we are today much better off in job creation than what we were in the last fifteen years (from 2009)”, he said.

“Certainly between 2019 and 2024 (excluding the Covid years) we did a good job but in 2014-19 we bottomed out and stagnated for a while in job creation. There was significant disruption to economic activity due to disruption in the initial year of GST implementation. Covid was a big dip. Even accounting for Covid we had done well,” he added.

Anant noted that the aspect of quality of jobs are jobs. However the problem with job quality is that India does not have good data on “job quality” prior to 2016-17 and, therefore, it will only be guesswork on the quality of jobs created with respect to the past.

Earlier this week, the Labour Department figures showed 20 million new employment opportunities generated each year since 2017/18 as a counter to a Citibank report that said only 8.8 million jobs were added each year since 2012.