The election fever is about to be over. We will have a new Government on 4th June. Likely, it will be Modi 3.0. There are multiple economic challenges before the new government. Employment is the priority number one.
The Labour Force Participation Rate in India is around 56%, meaning one out of two working-age Indians is not gainfully employed and is not contributing to the GDP.
Further, we have a dismal labour productivity rate (i.e. GDP per capita per hour of the employed population) at USD 6.5, much lower than Indonesia and the Philippines and nowhere near Japan, South Korea and China.
Therefore, we are not competitive globally regarding labour efficiency, readiness for employment and productivity.
Our vulnerabilities on the employment front are accentuated by a surplus workforce in farming and a lack of avenues to transfer active labour from agriculture to manufacturing due to sub-optimal manufacturing investment and employment opportunities.
There is now an over-dependence on services; overall lack of employability, clustering of service industry opportunities mainly in urban areas and the skewed outsourcing and gig-working labour ratio that inhibit the formalisation of the working age employment are sour points in our economy.
The new government must think of out-of-the-box solutions. A corporate incentive through allowed deductions on taxable income for employment programs of companies, limited-term subsidies for the cost incurred on fresh trainees/employees, and policy boosts to CSR expenses on skill development can be considered.
How the new Government would address the unemployment issues and rural distress is going to make or mar the next government's bonhomie with people, especially the young voters.
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