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India’s economy is on a growth trajectory, and the workforce plays a key role in driving that expansion. The strength of India’s labor market, combined with government initiatives and emerging industries, has laid the foundation for sustained economic growth. India aims to achieve $5 trillion in economic growth by 2027-2028, and the contribution of its workforce will be central to this ambitious goal. India’s labor market has shown remarkable resilience, especially in the aftermath of the COVID-19 pandemic. According to a report titled ‘India Economic Outlook 2024’ by Deloitte, the economic growth rate in the first quarter of the fiscal year 2024-2025 is expected to be 6.7%, with a significant increase in labor participation, especially in key sectors such as manufacturing and services. I have recovered.
Sectors such as construction are showing strong job creation, strengthened by initiatives such as the National Infrastructure Pipeline. This is critical to reducing unemployment and boosting economic activity in both urban and rural areas. Further underscoring the positive shift towards inclusivity, increased female labor force participation, particularly in rural India, increased from 22 per cent in 2017-2018 to 40.3 per cent in 2023-2024. This expanded participation base strengthens national productivity, increases domestic consumption, and creates a virtuous cycle of growth.
Government initiatives and the role of private investment
Government policies have contributed to promoting job creation and revitalizing the labor market. The ‘Make in India’ initiative, along with Production Linked Incentives (PLI) for manufacturing industries, attracted domestic and foreign investment and created formal employment opportunities. Focusing on expanding manufacturing, where 51.4 percent of employment is paid employment, will be key to ensuring income stability.
Additionally, India’s youth-driven population offers unique demographic advantages. As global companies seek to diversify their operations, India has emerged as a leading destination for foreign direct investment. This influx of capital is leading to long-term employment opportunities, particularly in high-growth sectors such as semiconductors, electronics, and clean energy.
Although India has made progress, challenges remain. A significant portion of India’s workforce remains employed in the informal sector, particularly in agriculture and construction. These jobs often lack social protection and pay lower wages than formal employment. Despite these obstacles, the government’s focus on skills development and education is paving the way for a gradual transition from informal to formal employment.
The rise of emerging industries, especially those that require advanced education and specialized skills, is creating opportunities for higher quality jobs. For example, the number of green jobs is expected to increase as India promotes clean energy, and jobs are expected to be created in various fields such as agriculture, tourism, and transportation. This change is critical to addressing the challenge of informal employment and ensuring better income distribution across the economy.
Agriculture remains the largest employer in India, accounting for a significant proportion of the workforce. However, dependence on agriculture is decreasing as more workers move into higher-value sectors. Rural demand is on the rise due to a good monsoon and rising employment in the agriculture sector, which is further facilitated by government schemes such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
In addition to agricultural employment, increased construction employment due to increased government capital spending also contributed to the region’s recovery. This change allows for a more stable local income base, which stimulates consumer spending and fosters economic growth at the grassroots level. Governments’ focus on improving employability, particularly through efforts to provide education loans and internships to young people, is critical to ensuring a workforce to meet the demands of emerging industries.
As India moves towards its long-term goal of becoming a fully developed country by 2047, the country’s workforce will continue to be at the heart of this transformation.
