Unemployment in India: A look into the causes

India being the most populous country in the world possess a diversified workforce. According to World Bank Report, India had a significant youth unemployment rate of about 23 percent in the year 2022. So, it raises questions on what exactly is going wrong in India. Unemployment in India is the result of various factors, the most important of which are:

1. Population Growth: India has a large and growing population, which puts pressure on the job market. The workforce is expanding faster than the economy can create jobs. While India is the most populous country in the world, it is not keeping pace with the population in terms of economy.
2. Economic Slowdown: Periods of economic slowdown or recession can lead to reduced hiring by businesses, resulting in higher unemployment rates. Business are set with the purposes of making profits where employment is a means to an end of making gains. In cases of economic slowdown, businesses tend to do cost cutting which may involve the layoff of employees causing unemployment.
3. Skill Mismatch: There’s often a gap between the skills possessed by job seekers and the skills demanded by employers. This mismatch contributes to structural unemployment, where available jobs do not match the qualifications or preferences of job seekers.
4. Dominance of Informal sector: The informal sector employees a significant portion of India’s workforce which lacks job security, benefits, and legal protections. This sector often faces challenges such as low wages, lack of skill development, and limited access to credit and resources.
5. Educational System: There are issues within the education system, such as outdated curriculum, inadequate vocational training. Also, there is focus on theoretical knowledge rather than practical skills. These can contribute to unemployment by failing to equip graduates with the skills needed in the job market.
6. Cyclical Factors: Fluctuations in industries such as agriculture, manufacturing, and services can lead to cyclical unemployment as demand for labor varies with economic conditions.

Addressing unemployment in India requires comprehensive strategies that address these various factors, including educational reforms, skill development initiatives, labor market reforms, and policies to stimulate economic growth and job creation.