By The Diplomat | Created at 2026-08-31 17:51:42 | Updated at 2026-09-06 03:36:30
6 days ago
India has been struggling with a multi-faceted employment problem, which is triggering deep frustration among its youth, especially those who are educated.
This frustration was on display recently, when tens of thousands of young women and men protested at New Delhi’s Jantar Mantar, demanding the resignation of Union Education Minister Dharmendra Pradhan. While the immediate trigger for the protests was leaked question papers for medical entrance examinations, the underlying cause is frustration with an education system that doesn’t lead to meaningful employment.
The Indian economy is among the world’s fastest-growing large economies. Yet, it is producing an ever-increasing number of educated unemployed youth.
The problems are multifold. First, India is struggling to connect education and skills with available jobs. Second, its economy is not creating good-quality employment for a rapidly expanding and increasingly educated workforce. And third, poor government recruitment has rendered generic university degrees largely useless.
The warnings have been there for quite some time. A 2018 article by Indrajit Bairagya in the Economic and Political Weekly noted that the unemployment rate among the educated is not only higher than that among the uneducated, but it also increases with higher levels of education. Youth, both educated and uneducated, are more likely to be unemployed than older people. One reason is that the educated are unwilling to take low-grade informal jobs, while sufficient regular salaried jobs are also not available.
Developments over the last few years reveal a deeply worrying situation. A recent report titled “Reimagining Skilling for Viksit Bharat@2047,” published by NITI Aayog, the top policy advisor to the government of India, in August this year, said only 8.25 percent of graduates are employed in roles aligned with their qualifications. The remaining 91.75 percent are not working in roles that use the qualifications they acquired. They either acquired additional skills or are working below their skill level, the report said, blaming the poor education-to-job transition rate for India’s growing youth unemployment.
The report says that 80 percent of higher education students identify inadequate practical experience and industry exposure as a major problem. Degrees, diplomas and certificates do not consistently translate into employability when curricula remain disconnected from evolving workplace requirements. As a result, the unemployment rate among graduates stood at 13 percent, compared with the national unemployment rate of 3.2 percent; among women graduates, it was 20.4 percent.
The NITI report reveals that generic degrees don’t provide a direct pathway to employment. When a student with a graduate degree fails to land a job, she either turns to additional degrees or invests in coaching classes that she hopes will lead to a job. All these enhance the overall education costs for improving employability. The cost burden adds salt to the wounds of unemployment.
Some, including the NITI report, have suggested linking education to skills that will make youth more employable, but it cannot by itself create demand for their labor. India, therefore, also needs faster creation of productive, reasonably secure jobs capable of absorbing a large and increasingly educated workforce.
There is another problem—the informal sector is massive. Another paper published by NITI in March estimates that only 23 percent of India’s workforce are regular wage/salaried employees, while 19 percent are casual workers. The rest—about 58 percent—are self-employed/micro-entrepreneurs. Here, ‘self-employment’ often masks underemployment rather than genuine entrepreneurship.
Besides, the credibility of government data on unemployment has been called into question. A 2025 Reuters poll revealed that most of the independent economists who participated in the survey believed the Indian government’s unemployment data masks the severity of joblessness and underemployment. Official surveys use outdated definitions — counting anyone who works for as little as one hour per week as employed, they pointed out.
This means that India’s unemployment crisis is bigger than what it appears to be.
Economists have proposed various solutions. Raising concerns about the impact of automation and AI on future employment, development economist Santosh Mehrotra has called for a stronger manufacturing strategy. Former Reserve Bank of India chief Raghuram Rajan said India needed “structural economic pivots toward labor-intensive white-collar and specialized job creation.” Many have urged shifting focus away from purely capital-heavy incentives toward sectors like textiles, leather, and light engineering that can absorb the millions moving away from agriculture.
Such proposals would require policy reversals by the Narendra Modi government. Whether the government aims for such changes to earn the confidence of the youth remains to be seen.
