Too few jobs, too many workers and ‘no plan B’: The time bomb hidden in India’s ‘economic miracle’

By Tara Subramaniam and Sania Farooqui, CNN

New Delhi CNN  —  Sunil Kumar knows all about working hard to achieve a dream. The 28-year-old from India’s Haryana state already has two degrees – a bachelor’s and a master’s – and is working on a third, all with a view to landing a well-paid job in one of the world’s fastest growing economies.

“I studied so that I can be successful in life,” he said. “When you work hard, you should be able to get a job.”

Kumar does now have a job, but it’s not the one he studied for – and definitely not the one he dreamed about.

He has spent the past five years sweeping the floors of a school in his village, a full-time job he supplements with a less lucrative side hustle tutoring younger students. All told, he makes about $85 a month.

It’s not much, he concedes, especially as he needs to support two aging parents and a sister, but it is all he has. Ideally, he says, he’d work as a teacher and put his degrees to use. Instead, “I have to do manual labor just to be able to feed myself.”

Kumar’s situation is not unusual, but a predicament faced by millions of other young Indians. Youth unemployment in the country is climbing sharply, a development that risks undermining the new darling of the world economy at the very moment it was expected to really take off.

India’s newfound status as the world’s most populous nation had prompted hopes of a youthful new engine for the global economy just as China’s population begins to dwindle and age. Unlike China’s, India’s working age population is young, growing, and projected to hit a billion over the next decade – a vast pool of labor and consumption that one Biden administration official has called an “economic miracle.”

But for young Indians like Kumar, there’s a flip side to this so-called miracle: too few jobs and too much competition.

Sunil Kumar, 28, is frustrated about what he sees as a lack of opportunities.

From ‘miracle’ to disillusion

In contrast to China, where economists fear there won’t be enough workers to support the growing number of elderly, in India the concern is there aren’t enough jobs to support the growing number of workers.

While people under the age of 25 account for more than 40% of India’s population, almost half of them – 45.8% – were unemployed as of December 2022, according to the Centre for Monitoring Indian Economy (CMIE), an independent think tank headquartered in Mumbai, which publishes job data more regularly than the Indian government.

Some analysts have described the situation to CNN as a “time bomb”, warning of the potential for social unrest unless more employment can be created.

Kumar, like others in his position, knows all too well the frustrations that can build when work is scarce.

“I get very angry that I don’t have a successful job despite my qualifications and education,” he said. “I blame the government for this. It should give work to its people.”

The bad news for people like Kumar, and the Indian government, is that experts warn the problem will only get worse as the population grows and competition for jobs gets even tougher.

Kaushik Basu, an economics professor at Cornell University and former chief economic adviser for the Indian government, described India’s youth unemployment rate as “shockingly high.”

It’s been “climbing slowly for a long time, say for about 15 years it’s been on a slow climb but over the past seven, eight years it’s been a sharp climb,” he said.

“If that category of people do not find enough employment,” Basu added, “then what was meant to be an opportunity, the bulge in that demographic dividend, could become a huge challenge and problem for India.”

‘There’s competition everywhere’

To be clear, it’s not all doom and gloom.

Economists say India has various options to address these demographic problems – among them, developing an already globally competitive and labor-intensive manufacturing sector, which accounted for less than 15% of employment in 2021, according to Capital Economics, a relatively low amount.

But such fixes on the macro level will do little to help those who are struggling now. Students like high-schooler Megha Kumari, who must take ever more extreme measures to get an edge on the competition.

Kumari, 17, has left her hometown of Dumka, in the eastern state of Jharkhand, to study at the Vibrant Academy in Kota, a city in the northern state of Rajasthan – more than 800 miles (1,300 kilometers) away.

The academy is one of several such centers across India where students hoping to qualify for top-tier colleges go to augment the regular high school curriculum with extra exam prep courses and tutoring sessions.

Kumari sees it as her best chance of realizing her dream of becoming a professor, but it comes at great cost, financially and personally.

In a country where the average salary for regular full-time workers is around $225 per month, according to the most recent government figures, tuition fees for one year at the academy range from around $145 to $1,872.

Kumari said she also keenly misses the support her family used to provide.

“The environment is actually really competitive,” Kumari said. “Living alone and away from family and going through all that stress is hard for a student.”

Her situation, too, is not unusual.

“Since childhood, we’ve been facing this competition,” said Sarang Agrawal, 28, who is studying for the Indian civil service entrance test.

“In India, there’s competition in every exam. There’s competition everywhere.”

Sarang Agrawal (center) is studying in the hope of becoming a civil servant.

No social life, no love life … and no plan B

Like Kumar and Kumari, Agrawal knows all about competition. He is among the more than 1 million people who apply each year for a position in the Indian civil service.

It’s one of the country’s most highly sought-after jobs and, with less than 1% of applicants making the cut, a whole industry has grown up around helping people get their hands on what they see as a golden ticket.

“As the population has increased, the competition has increased, so people’s chances have reduced,” said Madhusudan, who goes by only one name and is the director of content and strategy at Study IQ, a tuition center specializing in helping people study for the civil service entrance exam.

India’s youth, he says, are feeling the pressure.

“You can see the stress level is very high these days among the students. Students come to me and say ‘Sir, I’m not able to sleep,’” Madhusudan said.

There’s precious little time for anything to defuse the tension – “No social life, no love life,” as Agrawal put it, “but at least we have a goal.”

Still, in this most competitive of markets, even the most driven are tested to their limits.

Agrawal has taken the civil service exam four times without success. Continuing with his dream is costing his family dearly, to the tune of around $3,000 a year when tuition fees, food and housing are taken into account.

“They could have bought three to four cars with the money they spent on me,” said Agrawal, who feels he has no other option but to keep trying.

“There’s no such Plan B,” he said.

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