India’s employment sector showed robust growth in the fiscal year 2023-24, according to the Reserve Bank of India (RBI)’s latest data. The employment growth rate surged to 6%, a significant rise from 3.2% in the previous fiscal year. This marks the highest employment growth rate recorded since the RBI began its data series in 1981-82.
In absolute terms, the Indian economy added 46.66 million jobs during the financial year ended March 2024, bringing the total number of employed individuals to 643.35 million. This figure more than doubled the 19.15 million jobs created in the preceding fiscal year. The RBI’s updated data also revised previous years’ employment numbers upward, reflecting a trend of stronger job creation.
The RBI’s provisional data release, part of its India KLEMS database, also provided insights into productivity trends across various industries. It indicated that total factor productivity growth, on a value-added basis, slowed to 2.0% in 2022-23 from 3.8% in the previous year. This data underscores ongoing challenges in sustaining productivity growth over recent years.
Rising GDP
In parallel, India’s real GDP expanded by 8.2% in fiscal year 2023-24, up from 7% in the preceding year, indicating a robust economic backdrop for the period. The positive employment growth figures are seen as a critical indicator of economic health, reflecting improved labor market conditions amidst broader economic expansion.
However, challenges remain, as highlighted by recent reports suggesting the need for sustained job creation to absorb new entrants into the labor market effectively. Despite the positive trends in employment growth, concerns persist regarding the quality and sustainability of job creation, particularly in the formal sector.
Dropping unemployment
The RBI’s latest bulletin also noted a decline in the all-India unemployment rate to a 20-month low of 7%, driven by lower urban unemployment rates. The bulletin highlighted a mixed picture in labor market indicators, with a marginal decline in labor participation rates but an increase in the employment rate compared to previous months.
