India’s Job Market: The Struggle for Growth in the Private Sector

India’s job market is confronting a harsh reality — merely 5-7% of the populace has formal employment, with nearly 40% of these individuals working in the government or public sector. This significant issue, emphasised by CIO Mihir Vora of Trust Mutual Fund, prompts a vital question: Has India genuinely enabled its private sector to thrive?

In a post on X, Mihir Vora brought attention to the entrenched structural challenges in India’s employment scenario. He stated that the private sector has not been fully allowed to thrive, underscoring the urgent requirement for extensive job creation. He believes that sustainable employment can only be realized by promoting private sector advancements in manufacturing, infrastructure, and real estate—fields that necessitate robust business confidence and substantial policy backing.

The Need for Private Sector Growth

Vora noted that jobs will be generated in significant quantities through the development of physical assets—specifically in manufacturing, factories, infrastructure, and real estate—capitalizing on the private sector’s vitality and dynamism. He further highlighted that facilitating a conducive business environment is essential for unlocking the job market’s full potential.

Only 5-7% of the population has formal jobs. Even among that group, 40% are in Government/Public sector. The private sector has truly not flourished. Jobs will only be created in substantial numbers by developing physical assets—manufacturing, factories, and infrastructure.

According to Mihir Vora, these factors are critical to capitalising on potential job growth.

Economic Outlook and Job Creation Projections

The Economic Survey 2024-25 reinforces this apprehension, stating that India must generate 7.85 million non-farm jobs each year until 2030. This survey, created by the Chief Economic Advisor to the Finance Ministry, emphasizes that creating employment opportunities is vital to harnessing India’s demographic dividend and facilitating a transition from an agriculture-dependent workforce to a more diversified non-farm labour pool.

Demographic Advantages and Challenges

With 26% of India’s population aged between 10-24 years, the survey posits the country as being on the brink of a unique demographic opportunity. However, experts caution that without impactful policy reforms, job creation initiatives, and skill development programmes, India’s demographic dividend risks devolving into a demographic crisis.

Current Employment Landscape

While the survey observes a decrease in unemployment rates and enhancements in labour force participation, it alerts that these progressions will not remain stable unless labour regulations are made more adaptable, compliance pressures are lightened, and business oversight is simplified.