India must create 115 million jobs by 2030 to sustain economic growth, study finds

According to a Natixis SA report released on Monday, India will need to produce 115 million jobs by 2030 to meet its rising workforce. The report emphasizes the critical need for Asia's third-largest economy to increase growth in both services and manufacturing to maintain current economic progress.

According to Trinh Nguyen, a senior economist at Natixis, India will need to produce 16.5 million jobs every year, up from 12.4 million in the previous decade. Nguyen's research emphasised the necessity for 10.4 million of these jobs to emerge from the formal economy.

"To achieve this herculean task, India's growth engine needs to fire on all cylinders, from manufacturing to services in the next five years," Nguyen wrote in her study.

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While India's economy is expected to develop by more than 7 per cent this year, one of the fastest rates in the world, this pace may be insufficient to offer employment for the country's 1.4 billion people. High youth unemployment remains a significant issue for Prime Minister Narendra Modi, who is running for a third term amidst ongoing national elections.

Despite the development of 112 million jobs over the last decade, Nguyen estimates that only approximately 10 per cent of these roles are official. According to World Bank data, the country's labour force participation rate is 58 per cent, which is much lower than that of other Asian nations.

Nguyen pointed out that the services industry, which accounts for more than half of India's GDP, has few chances in terms of headcount and labour quality. As a result, India must use its manufacturing sector to compete with companies and countries looking to diversify away from a China-centric supply chain.

"The incoming administration needs to jump on the manufacturing train and capitalize on demographic and geopolitical tailwinds," she added. "Even if the road forward is challenging, it is never too late to walk down the right path."

(With inputs from Bloomberg)