India needs 10 million jobs annually to fuel growth: Goldman Sachs

Around 10 million jobs need to be added annually between 2024-25 and 2029-30 for India to maintain an average gross value added (GVA) growth of 6.5% year-on-year, according to a report released on Wednesday.

In comparison, an average of 8.5 million jobs were generated each year from 1999-00 to 2022-23.

Over the past 23 years, around 196 million jobs were created, with nearly two-thirds of these generated between 2012-13 and 2022-23, according to the report titled 'What is driving job growth? - Navigating through sectoral shifts in Indian labour markets,' by Goldman Sachs.

Between 2019-20 and 2022-23, an average of 26 million jobs were added annually due to an increase in agricultural and services jobs. " Job creation in agriculture was partly aided by workers migrating back to rural areas during the pandemic, supported by additional government subsidies which created a safety net for these workers," the report noted.

Within the services sector, business services and retail or wholesale trade contributed the most towards job creation over the last 20 years. Business services include management consultancy services, scientific research and development.

The report's analysis is based on the KLEMS database by the Reserve Bank of India (RBI) and the Periodic Labour Force Survey (PLFS).



In the manufacturing sector, while employment declined by 0.2 million jobs on average each year between 2012-13 and 2016-17, coinciding with a weaker investment cycle, it increased by an average of 2.4 million annually from 2020-21 to 2022-23. This was mainly due to the Production Linked Incentive (PLI) schemes introduced in 2020 by the government, the report mentioned.

In the last 10 years, capital-intensive manufacturing sectors like chemical products, machinery etc. recorded stronger employment growth compared to labour-intensive areas like textiles and footwear, food and beverages.

The dependency ratio in India will be one of the lowest among major economies over the next two decades.

Till 2035, the working age population will remain around 69% and will gradually drop to below 60% by 2050. "It is imperative for India to capitalize on this 20-year window of favourable demographics and increase per-capita income levels," the report highlighted.

It suggests three policies for job creation in the country: "incentivising affordable social housing development," as the real estate sector employs over 80% of the construction workforce; expanding IT hubs and global capability centres (GCCs) into tier 2 and tier 3 cities; and re-allocating fiscal incentives to support labour-intensive manufacturing sectors.

The labour force participation rate (LFPR) has increased in the last six years, according to the PLFS survey, driven largely by an increase in female participation, particularly in rural areas.