Youth employment and unemployment in India

An increase in the number of young people globally seems to be one of the sources of future economic growth in India. However, the proportion of Indian youth in the labour force has been declining. This paper argues that the problem of youth unemployment and underemployment would remain a serious policy issue for many more years to come in India. In this context, it highlights the issues and problems of youth population by looking at trends in youth labour market and population outside the labour force.

The document notes that unemployment among Indian youth is three times to that of adults for usual status. Furthermore, wage levels of employed youth are lower than those of adults. In terms of education, the authors note that 89% of the youth have not taken any kind of vocational training, and among the rest about half of them have received education through hereditary practices. As a result, this indicates a negligible level of formal vocational training amongst young people.

Based on the findings, the following recommendations are given:

• appropriate macro policies are important for generating employment
• these include encouraging investments in labour intensive sectors, fiscal reforms to improve capital expenditure, and trade liberalisation to improve exports and generate employment
• measures have to be taken to improve the educational attainment of the youth, accompanied by fundamental reform of the curriculum
• skill improvement and vocational training are among the important things needed in active labour market policies
• micro finance institutes should be encouraged for livelihood promotion
• nevertheless, agricultural credit must not be weakened, and the micro credit movement is not a substitute for the agricultural credit by the banks.