India needs to create 7.85 million non-farm jobs annually by 2030 to absorb the growing workforce at a time when emerging challenges such as artificial intelligence (AI) could pose “the biggest disruption to the future of jobs”, said the Pre-Budget Economic Survey 2023-24 tabled in Parliament on Monday.
The study said the adoption of AI is transforming the job market and India “will not be immune to this change”, and called for a “grand alliance” between the government and the private sector to leverage these technologies to reshape rather than replace jobs.
“Artificial intelligence casts significant uncertainty about its impact on workers at all skill levels — low, medium and high,” said the report, authored by researchers led by principal economic adviser V. Ananta Nageswaran.
The review also noted that AI technologies may pose barriers and obstacles to sustained high growth in India. According to a study by the International Monetary Fund, around 40% of jobs currently employed around the world will be exposed to AI. A study cited in the review found that 26% of jobs in India are highly exposed to AI.
Citing a survey of 33,000 companies, the report noted that corporate profits “quadrupled” between fiscal 2020 and 2023, but not enough jobs were created. “Growth in employment and compensation has barely kept up.”
The report said India's unemployment rate is expected to fall to 3.2% in 2022-23, while youth and female labour force participation rates have also risen. The surge in agricultural employment was partly due to reverse migration to rural areas during the pandemic.
According to the survey, the government's annual and quarterly Periodic Labour Force Surveys (PLFS) show that the annual unemployment rate for people aged 15 and above has declined since the pandemic, either in normal conditions or by the US, the reference period in which people are considered employed if they have been economically active for 30 days in the last 365 days prior to the survey.
Citing the latest PFLS, the survey said the urban quarterly unemployment rate for people aged 15 and above fell to 6.7 per cent in the quarter ending March 2024 from 6.8 per cent in the same period last year.
This decline has been accompanied by an increase in the labor force ratio, which is the number of employed people, and the labor force participation rate, which is the ratio of people who are employed to those looking for work.
To be sure, estimates of private sector unemployment in the world's fastest-growing economy vary widely from the PLFS published by the Ministry of Statistics. India's unemployment rate stood at 9.2% as of June 2024, according to data firm the Centre for Monitoring the Indian Economy.
The study finds that the care economy and food processing are two sectors with great potential for job creation: “Agro-processing and the care economy are promising candidates for creating and sustaining quality jobs, and the care economy is also essential for levelling the playing field for women in the labour market.”
To meet the demand for 7.85 million jobs per year, the study said there was “room to complement existing schemes” such as production-linked incentives, which could create six million jobs over five years, and the MITRA textile scheme, which is expected to create two million jobs.
“The unavailability of timely data on the absolute number of jobs (formal and informal) created in various sectors – agriculture, industry including manufacturing, and services – even annually, let alone more frequently, precludes an objective analysis of the country's labour market situation,” the report said.
