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What links the burning trains in January to June: Lack of jobs

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The Economic Times
17th June, 2022 13:24 IST

India’s raging unemployment epidemic makes itself felt once again – in torched trains and young men sloganeering and protesting in the streets.

It is a scenario repeating from January this year when rage from stalled railway recruitment led to protesting youth burning train coaches in the states of Uttar Pradesh and Bihar from where a sizeable number of candidates appear for the common test. The protesters flagged issues in the recruitment procedure.

This time, it is the Modi Government’s announcement of hiring soldiers for the Indian army only four years – without promotions, health benefits or pension – that has led to eruption of young anger on the streets.

At the core of January and June is a common link that is driving young men to desperation: lack of jobs.

The railways’ recruitment drive indicated a glaring mismatch between the demand and supply of jobs — a staggering 1.25 crore candidates appeared for 35,281 vacancies.

Not even trying
In April, data threw up a bigger worry. A growing number of people, more than half the working population, are no longer even looking for work.

Frustrated at not being able to find the right kind of job, millions of Indians, particularly women, are exiting the labor force entirely, according to new data from the Centre for Monitoring Indian Economy, a private research firm in Mumbai.

Between 2017 and 2022, the overall labor participation rate dropped from 46% to 40%. Among women, the data is even starker. About 21 million disappeared from the workforce, leaving only 9% of the eligible population employed or looking for positions.

Now, more than half of the 900 million Indians of legal working age – roughly the population of the U.S. and Russia combined – don’t want a job, according to the CMIE.

Not reaping demographic dividend

What worries experts about high unemployment is that India’s young population was to give it an economic advantage. Others worry about jobless young men being exploited by divisive politics.

“The large share of discouraged workers suggests that India is unlikely to reap the dividend that its young population has to offer,” Kunal Kundu, an economist with Societe Generale GSC Pvt in Bengaluru told Bloomberg. “India will likely remain in a middle-income trap, with the K-shaped growth path further fuelling inequality.”

Former Reserve Bank of India Governor Raghuram Rajan has said that if unemployment rates in India remain high, it may lead to 'entrepreneurial' politicians who cater to religious divisions, rather than focusing on actually enhancing jobs.

Rajan said the higher unemployment rate in the country is a real danger, in an interview this month.

“Unemployment rates stay high, especially for the lower middle class and that creates more inequality and divisions, and (room for) entrepreneurial politicians who cater to these divisions. (Perhaps they say) “let’s focus on recovering these former Hindu temples which now have mosques (standing there)” rather than focusing on actually enhancing jobs,” Rajan said.

India’s challenges around job creation are well-documented. With about two-thirds of the population between the ages of 15 and 64, competition for anything beyond menial labour is fierce. Stable positions in the government routinely draw millions of applications and entrance to top engineering schools is practically a crapshoot.

The struggle is real
Though Prime Minister Narendra Modi has prioritized jobs, pressing India to strive for “amrit kaal,” or a golden era of growth, his administration has made limited progress in solving impossible demographic math. To keep pace with a youth bulge, India needs to create at least 90 million new non-farm jobs by 2030, according to a 2020 report by McKinsey Global Institute. That would require an annual GDP growth of 8% to 8.5%.

Decline in jobs predates the pandemic. In 2016, after the government banned most currency notes in an attempt to stamp out black money, the economy sputtered. The roll-out of a nationwide sales tax around the same time posed another challenge. India has struggled to adapt to the transition from an informal to formal economy.

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