India has gained the distinction of being the most populous country in the world. According to the Economic Survey 2018-19, India’s demographic dividend is expected to peak around 2041, when the share of the working-age population (20-59 years) is projected to reach 59 per cent. At the same time, according to a study published in The Lancet, India’s fertility rate (TFR) decreased to 1.9 in 2021 and is projected to decline further to 1.29 by 2050, significantly lower than the replacement rate of 2.1. This means that since 2021, India has not been offsetting deaths with new births, and its population is gradually aging. With more people in the labour force and fewer children to support, India has a window of opportunity for higher economic growth.

Harnessing this dividend requires expanding more opportunities for young people to engage in economic activities, guided through suitable social and economic investments and policies in health, education, governance, and the economy. Many critics constantly point out that this demographic dividend requires a job to participate in the country’s economic activity. As per the ILO and IHD’s “India Employment Report2024”, the percentage of the working-age population in the labour force (LFPR) and the percentage of employed persons in the population (WPR) showed improvement from 50.2 per cent and 47.3 per cent in 2019 to 55.2 per cent and 52.9 per cent in 2022 ~ a clear jump of around five percentage points in three years in both numbers.

The Unemployment Rate also reduced from 5.8 per cent in 2019 to 4.9 per cent in 2022. In 2022, the dominant employment category in India remains self-employment, which accounted for 55.8 per cent of employment, followed almost equally by regular and casual employment. In 2012, 52.2 per cent of employment was in self-employment, followed by casual and regular employment, which constituted 29.9 per cent and 17.9 per cent of employment. So, from 2012 to 2022, there is a jump of 3.6 per cent in self-employment and regular employment and a dip of 7.2 per cent in casual employment. This is a welcome structural change as the average monthly earnings of selfemployed and regular salaried in 2022 at nominal value is Rs 11,973 and Rs. 19,010 respectively, far above the casual worker’s monthly earnings of Rs 8,267. So, anyone claiming that the Modi Government is not able to deliver on the jobs front is incorrect, misleading, and not supported by data.

If the government initiates a new infrastructure project, it will require labour, manufacturing, services, agricultural output, and technology to support it. This will create new employment opportunities. The Modi government’s positive impact on job creation through spending on infrastructure projects over the last 10 years is supported by data from the SKOCH report. The report states that 51.40 crore personyears of employment were generated between 2014 and 2024. Many political leaders from opposition parties ask a question in almost all election speeches: “Where are the new jobs?” This observation can be compared to the story of a farmer who sowed seeds on his farm but failed to estimate the exact amount of crop that would be harvested in a few months. The purpose of this story is to highlight that most of the new initiatives announced by PM Modi aim to create new employment opportunities in the days to come.

One notable initiative is SANKALP, which aims to construct an additional three crore new houses for low-income individuals over the next five years under the leadership of the Prime Minister. I attempted to gauge the potential employment impact of this initiative alone over the next five years. When we calculate the potential employment created by the construction of these houses, we find that the average size of each home is 25 square meters. It is estimated that the construction and finishing work for each house will take around three months, with an average of four people assigned to construction work on each home. This would result in approximately 1,080 crore labour days of direct employment over the next five years. Furthermore, the construction of these three crore houses will potentially generate additional employment of around 400 crore labour-days in various sectors such as cement manufacturing, brick manufacturing, iron and steel manufacturing, electric fittings, plumbing, paint, and logistic movement of raw materials and other finishing materials. So, a total of approximately 1,480 crore labour days of new direct employment will be created by constructing three crore new houses in the next five years. If one person is employed for 250 days a year, then in 5 years, they will be employed for 1250 labour days.

Therefore, to complete this initiative only, around 1.2 crore people will be employed directly for the next five years. This is just one initiative, and if we include other initiatives such as SANKALP for World Class Infrastructure, Global Manufacturing Hub, Garib Parivar Jan, MiddleClass Parivar Jan, etc., the new employment creation numbers will be even higher. In order to achieve our goal of becoming a “Developed Nation” by 2047 and the world’s third-largest economy within the next five years, we need to prioritize improving job quality and ensuring strong wage growth. This will enable us to fully benefit from the demographic dividend for at least the next 15 years. While we have created jobs in the last 10 years, it is crucial to shift our focus towards more manufacturing, especially in labour-intensive sectors

(The writer is Professor of Finance, XLRI Xavier School of Management)