India's economy has long been known for its inability to create jobs, and the education system for its inability to produce professionals qualified for their jobs.
Though this may seem a contradiction, it is real and the country has not been able to resolve it.
The State of Working India 2026 report prepared by Azim Premji University underlines the truth of these statements by highlighting the mismatch between aspirations and realities.
It says opportunities for low levels of permanent, salaried and white-collar employment among graduates are shrinking, and fewer than 7% of male graduates were able to secure a permanent salaried job within a year of graduating as of 2023. Every year, about five million graduates enter the workforce, but less than half of them find employment. Secure, well-paying jobs are more difficult to get.
The bigger picture is more unnerving. The country has 367 million young people between 15 and 29, adding up to about a third of its working population. Of this number, 263 million are outside the education system. They need jobs which they can do, unskilled, irregular or informal. But such jobs are not available. The working age population is set to rise till 2030, and decline after that. No other country has so many young people who need work and are ready to work.
This demographic window, considered India's opportunity, is narrowing. Though India is projected to have a demographic advantage over other countries till 2055, it will be limited if most young people cannot find work or can only get work below their qualification. The mass of unemployed people will turn out to be a demographic burden, with economic, social and political consequences.
The challenge facing the nation is two-fold. It has to create jobs in all sectors and at all levels to absorb the millions entering the workforce. Economic growth has been stable but the sectors that create the most employment, such as manufacturing, have been stagnant. The challenge will turn harder with the advent of artificial intelligence (AI) and other technologies that reduce the human component in work. The study says educational gaps of earlier decades are being bridged and gross enrolment ratios in higher education are in line with the country's stage of development.
The second challenge therefore is to focus on employability. General standards of education need to improve, vocational education needs greater priority, and initiatives such as the Skill India Mission and the Prime Minister Internship Scheme call for more effective implementation. India needs a comprehensive strategy that links education with employment.