India need to create close to 8 million new jobs

General Studies Paper-3

Context: In the recently released Economic Survey, the Chief Economic Advisor estimated that India needed to create close to 8 million new jobs each year for the coming decade.

Status

• India has been one of the brightest spots when it comes to GDP growth rates.
• India is doing extremely well in terms of its growth numbers.
  • At 7% growth for this fiscal year makes India the fastest growing major economy in the world, and that contributes about 17% to global growth

Main Challenges

• Inflation: Inflation is stabilizing but still needs careful management to avoid adverse economic effects.
• Geopolitical Tensions: Conflicts, particularly in the Middle East, could affect commodity prices, such as oil.
• Political Uncertainty: Numerous elections globally this year may bring policy uncertainty affecting growth.
• Medium-Term Growth: Projected global growth rates are weak compared to historical averages, necessitating structural reforms.
• The dollar’s dominance is due to the strength of U.S. institutions, open capital markets, and network effects.

Impact of Artificial Intelligence (AI) on Employment

• About 25% of Indian workers are exposed to AI, with mixed effects on different sectors.
  • AI can help address skill shortages, improve public finance, and enhance educational methods.
  • But certain sectors, like call centres, may see reduced demand for human labour due to AI.

Related steps

• Flexible inflation targeting has generally been successful globally by anchoring inflation expectations and improving credibility.
• India’s Experience: Since adopting inflation targeting in 2015, India has seen more stable inflation, although challenges remain.\
  • India is experiencing robust GDP growth, contributing significantly to global growth.

Suggestions  and Way Forward

• Encouraging corporate investment and flexible labour markets can aid broad-based growth and job creation.
• Improving ease of doing business and reducing trade restrictions are vital.
• Focus on education, skilling, and raising productivity in agriculture is essential for long-term growth.
• Improving macroeconomic and financial stability, and currency convertibility, benefits countries regardless of whether their currency becomes dominant.
• With continued reforms, India could sustain and possibly enhance its growth, but job creation is crucial.
  • India needs to create 60 to 148 million new jobs by 2030, requiring broad-based growth across sectors.