Editorial of the Day (26 Dec): Despite growth, why Indian workers need to worry

Context: Despite surpassing optimistic projections, India’s second quarter GDP growth reveals contradictions, notably the lack of proportional productive employment opportunities for the growing labour force, intensifying the employment challenge annually.

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Concerns Regarding India’s Workforce

Limited Productive Employment: The rapid increase in the workforce hasn’t led to a corresponding growth in productive employment, especially in the manufacturing sector.
- For e.g. Only a slight increase of about two million jobs per year in the manufacturing sector.
Employment in Low-Productivity Sectors: Many new workers are employed in less productive sectors like agriculture, not in higher-productivity areas.
- For e.g. A larger rise of over eight million in the less productive agriculture sector.
Self-Employment and Women Workers: A majority of the new workforce entrants are self-employed or women, often engaged in small-scale or unpaid roles, rather than in regular or well-paid jobs.
- For e.g. Nearly seven out of 10 new workforce entrants are self-employed, and a similar proportion are women, mainly from rural areas.
Low Earnings in Self-Employment: Self-employed women, particularly in rural areas, earn significantly less than their male counterparts, with their real incomes barely rising.
- Self-employed rural women earned an average of Rs 5,056, compared to Rs 13,831 for men (April-June 2023).
Rising Demand for NREGA Work: There’s an increasing reliance on NREGA, suggesting financial distress and limited job options, particularly for women.
- For e.g Workers under NREGA rose from 7.5 crore (2017-18) to 8.75 crore (2022-23).
Surge in Unsecured Personal Loans: Households are increasingly taking out unsecured personal loans, indicating strained incomes and potentially financing self-employment, with potential risks to the financial sector.
- For e.g. Housing loans increased from Rs 16.8 lakh crore (March 2022) to Rs 20.53 lakh crore (September 2023).
Uneven Private Sector Investments: Despite public sector initiatives, private sector investment remains inconsistent, with new project announcements declining and reliance on government capital expenditure.
Investments in Physical Assets: Affluent households are investing more in real estate rather than industry, suggesting a skewed investment pattern.