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Youth unemployment will devastate India if left unchecked

Military Recruitment Uproar Exposes The Pain Of A Jobless Recovery


Narendra Modi in Mysuru on June 21: The Modi government is in a bind.   © AP

When Narendra Modi was first elected as prime minister in 2014, his promise of 100 million new jobs by 2022 was based on the assumption that his government's Make in India manufacturing scheme would power private-sector job creation.

Modi certainly had the right idea. Unlike other surging Asian economies, India's rapid growth in the 1990s and 2000s was largely jobless, with most of the new jobs coming in sectors like information technology which employed relatively few workers. Still, the government's heavy-handed approach using high tariffs to discourage imports and industrial policy to jump-start domestic manufacturing largely failed.

The shock demonetization announcement in 2016 put an already slowing economy into a tailspin as supply chains and credit relationships based on cash were disrupted. Likewise, the informal workers that make up about 90% of the labor force, along with small businesses that make up most of the economy, all took a huge hit. Then came COVID-19.

Still, it was already clear that Modi had downsized his aspirations regarding meaningful job creation. In a now-infamous 2018 interview, Modi quipped that making a pakora, a fried Indian street snack, was also a job. Perhaps he had forgotten that was exactly the kind of menial work he had promised voters he would replace with high-paying and productive jobs in the modern economy.

Fast forward to 2022, with India's economy back on track, Modi has recommitted to job creation, now claiming that his government will create one million new jobs in the public sector by 2024. A tacit admission that his promise to create millions of private-sector jobs remains largely unfulfilled.

The current growth surge continues to be largely jobless. Perhaps the more remarkable thing is that decades after economic liberalization in 1991, millions of Indians still aspire to well-paying and secure government jobs which promise tenure until retirement with a generous pension and benefits.

Comparable private sector jobs, if they even exist, say in education or health care, typically offer much lower wages, little or no benefits and no guarantee of a pension or job security.

That is why when even a handful of government jobs are advertised, tens of thousands apply. Earlier this year, about twelve million applied for 35,000 clerical positions in the Indian Railways, a large government sector employer.

On Jan. 26, several thousand disgruntled young people looking for railway jobs torched a railway carriage in Gaya in eastern India. Such occurrences are commonplace when there is such fierce competition for the few government jobs that are available.

A train coach burns following a protest in Gaya on Jan. 26.   © ANI/Reuters

More recently, widespread protests, some of them violent, have broken out after the Indian military, another plum government employer, announced a new recruitment drive in which only 25% of successful candidates will get permanent jobs, with the other 75% to be let go after four years with a one-time severance payment and no pension.

The new recruitment policy angered thousands of young people, especially in the poor, underdeveloped northern and eastern hinterlands where a secure job with the military is highly sought after.

The Modi government is in a bind. On the one hand, it needs to recruit hundreds of thousands of new military personnel in the context of a fraught relationship with its two nuclear-armed neighbors, China and Pakistan.

A border clash in a disputed area with China in 2020 saw the Chinese occupy part of the territory India claims as its own. Meanwhile, China's ally, Pakistan, supports insurgents and extremists in the disputed Indian region of Kashmir, which routinely sees the deployment of tens of thousands of Indian troops to maintain law and order.

But the armed forces' budget is bloated by large salaries and pension payouts which together account for almost half of the total military budget, making it difficult for the government to recruit new personnel as well as purchase the materiel it needs to defend its borders.

The unpopular new recruitment drive Agnipath, or path of fire, was intended to square the circle by allowing the government to hire a large number of new personnel without putting a long-lasting salary and pension burden on the treasury. As the ongoing protests demonstrate, this has clearly backfired.

They also point to India's sluggish job market, where well-paying and productive jobs in the formal private sector economy are still few and far between. This may also help explain the large number of frustrated workers who have stopped looking for work.

According to the Center for Monitoring Indian Economy, a think tank, there are about 17 million Indians who would like to work but have become so frustrated that they have virtually given up because they see no prospect of finding a job.

With a median age of 27, India's population is youthful and frustrated. Given the serious social pathologies that follow from high youth unemployment, especially among men in the form of lawlessness and violence, particularly toward women, the hope that India's young people will be its demographic dividend is starting to fade.

The reality is starting to set in that if too many young people stay unemployed and frustrated, India is sitting on a demographic time bomb.

Rupa Subramanya is a researcher and commentator. She is a distinguished fellow of the Asia Pacific Foundation of Canada and the co-author of "Indianomix: Making Sense of Modern India."