DIGIVESTASI - Creating jobs has become a major challenge for the third term of Indian Prime Minister Narendra Modi, as the country’s young workforce struggles to find employment. More than 40% of India’s 1.4 billion population is currently under the age of 25, and the country has overtaken China as the world’s most populous nation since last year.

Unemployment was previously considered a significant factor behind Modi and his party, Bharatiya Janata Party (BJP), failing to secure a majority in recent elections. The BJP’s vote share fell below the party's expectations.

In the 2024 budget announcement on Tuesday (July 23), the Indian government plans to allocate $24 billion (approximately Rp388.8 trillion) over five years to drive job creation. "In this budget, we are focusing on jobs, skills, small businesses, and the middle class," said Finance Minister Nirmala Sitharaman.

Sitharaman also announced a scheme that will provide internship opportunities to 10 million youths at 500 leading companies over five years. However, this budget has been criticized by the Secretary-General of the opposition party, Jairam Ramesh, who said that the central government is finally acknowledging mass unemployment as a national crisis. "It is too little, too late, more about image than real action," he added.

Shrijay Sheth, founder of LegalWiz, told DW that he hopes greater incentives will be provided to companies to choose India due to cost benefits and access to a large young workforce. "Hyundai looking to IPO in India, or talks with Tesla to set up manufacturing in India are examples demonstrating this," he said.

The unemployment crisis is worsening in India. In Mumbai, a recruitment event at Air India Airport Services was canceled after 25,000 job seekers showed up for 2,220 positions. In February, nearly 4.7 million applicants took an exam for around 60,000 police positions in Uttar Pradesh.

"The government and all its institutions continue to deny the unemployment problem," Arun Kumar, an economist, told DW. According to the Centre for Monitoring Indian Economy (CMIE), India’s unemployment rate reached 9.2% in June 2024, up from 7% in May this year. Kumar added, "All of this contradicts the official narrative of massive job creation."

Although India experienced economic growth of 8.2% in the previous fiscal year, the country struggles to create jobs for the millions of young people entering the labor market each year. Development economist Santosh Mehrotra said India needs to develop a labor-intensive manufacturing strategy similar to China’s approach. "The demand for jobs will only be met if various factors work together," he said.

According to World Bank data, India's manufacturing sector contributes 13% of GDP, while in China, this sector contributes over a quarter of GDP. Mehrotra added that labor-intensive manufacturing by SMEs requires sustained support, including development programs and training schemes for the youth.

Lekha Chakraborty, a professor at the National Institute of Public Finance and Policy, emphasized the importance of training programs to address unemployment and bridge the gap between formal education and skill development across various sectors.

India’s informal sector, which absorbs the majority of jobs, lost 16 million jobs between fiscal year 2016 and 2023, according to India Ratings. The informal economy comprises unregistered businesses and jobs that are untaxed or not officially monitored.

The Indian Finance Minister announced a job incentive scheme aimed at creating jobs in the manufacturing sector by providing incentives for first-time employee hires.

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