Introduction
India is poised to become the third-largest economy in the world by surpassing Japan and Germany in the next few years, according to IMF projections.
By 2028, India's GDP is expected to reach $5.8 trillion, positioning it firmly among the top three global economies alongside the US and China.
The quality of employment will play a pivotal role in determining whether India's economic rise will improve the quality of life for its citizens.
Economic Projections and Growth
IMF projections indicate India's GDP will grow from $3.5 trillion to $5.8 trillion by 2028, adding $2.3 trillion to the economy.
This growth is expected to average 6.5% annually, aligning with India's historical growth rates but lower than the mid-2000s peak.
Despite this growth, India will remain the poorest nation among the largest economies, with a per capita income of $4,281 by 2028-29.
IMF's historical accuracy: Projections have been both over- and under-estimated in the past, suggesting these estimates are not set in stone.
Challenges of Employment Quality
Sustaining healthy growth rates and broadening the consumption base will be challenging given the current state of employment.
A significant portion of India's workforce remains in low-productive, informal jobs.
Data shows an increase in informal enterprises: from 5.76 crore in 2010-11 to 6.5 crore in 2022-23, employing roughly 11 crore workers.
These informal jobs are characterized by low productivity and earnings, with value-added per worker significantly lower than in formal enterprises.
Comparison of productivity: Informal sector workers add approximately Rs 1.4 lakh in value, whereas formal sector workers add about Rs 15.04 lakh.
Informal Sector and Productivity
The number of informal establishments hiring workers decreased from 16% in 2015-16 to less than 15% in 2022-23.
Informal sector wages: Wage growth in the informal sector has barely kept pace with inflation, leading to negligible real wage growth.
Low-productive sectors like agriculture and informal non-farm enterprises employ about two-thirds of India's labor force.
The formal sector's capital intensity and lack of low or semi-skilled job opportunities limit the options for these workers.
Sectoral shifts: Informal sector's contribution to overall economic value is declining, exacerbating employment challenges.
The Gig Economy
The gig economy has emerged as a significant employment sector, with companies like Uber, Zomato, and Swiggy providing jobs to millions.
Uber ranks as one of the largest employers in India, with over 10 lakh drivers, followed by Zomato and Swiggy with over six lakh delivery personnel.
Gig economy dynamics: These jobs often lack job security, benefits, and are characterized by precarious working conditions.
Implications of Job Quality
The quality of employment will determine whether India can replicate the East Asian model of economic success or fall into the Latin American trap of inequality and stagnation.
The rising labor force participation rate, especially among women due to financial distress, highlights the need for more productive job opportunities.
Migration trends: Declining migration, indicated by reduced Railway passenger traffic, impacts resource transfer from urban to rural areas.
Labor market duality: The persistent divide between productive formal employment and low-productive informal jobs will shape economic outcomes.
Government Response and Fiscal Policies
Governments will find it challenging to limit fiscal transfers to the less well-off if employment quality does not improve.
High levels of taxation on the affluent have increased significantly, with collections from surcharges on high-income individuals rising from Rs 1,343 crore in 2014-15 to Rs 65,000 crore in 2023-24.
This approach of taxing the rich while increasing giveaways has its limits and may not be sustainable in the long term.
Fiscal sustainability: Balancing fiscal transfers with productive employment growth is crucial for long-term economic stability.
Social Mobility and Income Inequality
The failure to create more productive jobs on a large scale will likely lead to less social mobility and high-income inequality.
The deepening labor market duality may manifest in various socio-economic challenges, determining whether India can follow the East Asian development path.
Inequality indicators: Rising income inequality and limited social mobility could undermine social cohesion and economic progress.
Conclusion
India's economic growth trajectory presents both opportunities and challenges.
The quality of jobs created will play a crucial role in shaping the quality of life for India's citizens.
Ensuring that economic growth translates into productive and well-paying employment is essential for sustained development.
Policy priorities: Enhancing job quality and productivity in the informal sector should be a key focus for policymakers.
Note: In this CAPF essay on India's Job Quality & Market, the world limit has been crossed to give you more information, you can take relevant portions as per your need. Further, we have given subheadings for your reference. When you write in the UPSC exam, you don't need to do that.
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