India’s Job Dilemma: 7% Growth May Not Be Enough


India faces a daunting challenge: creating enough jobs for its growing workforce, even with a strong 7% economic growth rate. A recent Citigroup Inc. report suggests that despite rapid economic expansion, India may still struggle to provide adequate employment opportunities.

The Job Creation Shortfall

According to Citigroup’s economists, Samiran Chakraborty and Baqar Zaidi, India needs to create about 12 million jobs annually over the next decade to keep up with new labor market entrants. However, with a 7% growth rate, the country is projected to generate only 8-9 million jobs each year. This shortfall highlights a significant gap in job creation that could hinder economic stability.

Formal Employment Decline

Formal sector employment has also declined. In 2023, only 25.7% of the workforce had formal jobs, the lowest in 18 years. This shift towards informal employment, which often lacks job security and benefits, is concerning. Only 21% of the workforce, or about 122 million people, hold salaried positions, compared to 24% before the pandemic. Over half of India’s 582 million workers are now self-employed, underscoring the dominance of informal work.

Unemployment: The Hidden Crisis

While the official unemployment rate is 3.2%, this figure underestimates the true extent of the problem. The Centre for Monitoring Indian Economy (CMIE) reports a jobless rate of 9.2% in May, the highest in eight months. For young people aged 20-24, the unemployment rate is even more alarming, exceeding 40%.

Steps Towards Improvement

Citi’s economists recommend several measures to address the job crisis. Strengthening the export potential of manufacturing, extending incentives to attract foreign companies, and filling approximately 1 million government vacancies are key strategies. Additionally, consolidating various employment generation programs could enhance their effectiveness.


India’s struggle to create sufficient jobs, even with robust economic growth, underscores the need for targeted policy measures. Improving job quality, boosting formal employment, and addressing youth unemployment are critical steps. The Citigroup report serves as a call to action for concerted efforts to enhance employment and skill development in India.