According to the Mckinsey Global Institute (1) report on Wednesday, India requires creating over 90 million jobs in the non-farm sector between the year 2023 to 2030. Otherwise, the country won’t be able to absorb new works and freshers in the labor market. Additionally, the report also mentioned the other 30 million jobs requirement for people who could switch from farm to more productive non-farm areas.
The report stated that Post COVID-19, at least 8 to 8.5% annual growth rate of GDP, would be needed. Compared to the previous scenario, India needs sustained robust productivity and faster employment engendering.
Mckinsey: India Needs to Create High Growth Path and Strong Productivity
To get a high growth path to create the 90 million jobs, India needs to increase its employment growth rate simultaneously to maintain its historic strong productivity growth. From 2023 to 2030, India needs to grow its net employment growth by 1.5% each year from 2023 to 2030. It is comparable to the average employment growth rate of 1.5% that the nation achieved from 2000 to 2012. However, the requirement is higher as there has been flat net employment from 2013 to 2018.
Simultaneously, India needs to maintain its productivity at 6.5 to 7% per year. It is comparable to what the sub-continent achieved between 2013 to 2018. In short, the country has two objectives: employment generation and growth. Notably, they are not contradictory since the employment cannot grow without high productivity, and vice versa.
As per the Mckinsey report, India could reform its six areas to increase its productivity and competitiveness. These areas are sector-specified policies. It includes improving productivity in several areas, including manufacturing, real estate, and more. India could double its productivity via specific measures like unlocking supply in land markets, flexible labor market, power distribution with efficiency, privatising its largest state-owned enterprises, and more reporting.