India can create 35 crore jobs by 2030, only if it fixes this problem

India has the potential to employ up to 35 crore workers in manufacturing and services sectors by 2030, but this will require a major push in skilling initiatives and investment, according to a new study by the National Council of Applied Economic Research (NCAER).

The study, titled "Pathways to Jobs", led by economist Farzana Afridi, highlights that while the country's labour force has grown by 9 crore since 2017-18, only 6 crore new jobs have been created during the same period. A large share of future employment—nearly 28 crore jobs—is projected to come from the services sector.

The report underscores that labour-intensive investments in both manufacturing and services could double overall employment, thanks to inter-sectoral linkages. However, it also notes that employment growth is being constrained by a stagnant manufacturing sector, declining labour intensity, and a shortage of skilled workers.

"The share of the workforce in agriculture has declined, but manufacturing has not picked up the slack," the report said, adding that labour intensity of production is falling, complicating efforts to absorb the expanding workforce.

While there has been some progress—particularly in the rise of high-skill employment in the services sector—the skills gap remains wide. In 2018, 92% of workers lacked training; by 2024, that number had dropped to 65%, but still, only 4% of workers had formal training.

To tackle this challenge, the economists suggest expanding vocational education and allowing students to choose between academic and skills-based tracks. They also recommend macro-level policy changes including higher public spending, tax cuts, investment incentives, and eased labour regulations to stimulate job creation.

With inputs from ToI