Aspirational India with a huge increase in the educated population ironically seems to be adding jobs in agriculture in the recent past! The ‘demographic dividend’ as it is often referred to, with a higher proportion of working age people within the total population, is going to be over by 2030; thereafter the share of the young is likely to decline after reaching its peak. At its peak, the share of the working age population will be more than double the dependent population. Unfortunately, it appears that realising the dividend within the small window of a few years is unthinkable as a recent report on the State of Working India suggests that graduate unemployment is as high as 40 per cent. The other startling fact is the withdrawal of young men and women from education to support their families. India hosts 367 million people between the ages of 15 and 29, which is the highest in the world, and accounts for one-third of the working age population. Out of these 367 million, some have opted out from the labour market as they are enrolled in educational activities while 263 million young people constitute the potential young workforce in India. This number is much higher than the population of any European country, also higher than the total population of countries such as Brazil or Pakistan. Out of the young population in the age group 20-29, 63 million attained educations of graduate standard and above and out of them 11 million are unemployed graduates. This number is more than the population of Sweden or Portugal. The sea of educated unemployment reflects two important facts. The rising gap between the demand and supply of graduated labour force and the related fact is that the production process in India continues to rely on low educated cheap labour. Interestingly the reversal of the work force from non-agriculture to agriculture and rise in the share of women employment in agriculture marks the irony of the supposed march towards Vikshit Bharat.

Reverse Flow to Agriculture

The concept of economic development entails a process of structural change which is a movement of people from low to high productivity activities. Since productivity in agriculture is a combined effect of both productivity of land and labour and since productivity of land approaches its natural limits, it is generally assumed that people moving from agricultural activities to industrial activities and to service-related activities is a sign of progress. But such a process should be accompanied by a progressive shift towards higher productive activities rather than mere shift between sectors. In the past four decades India experienced a massive shift of population from agriculture to non-agricultural activities particularly towards services and construction related activities. But since 2017 there has been a rise in the share of agricultural activities.

In the post Covid period 2021-22 to 2023-24 India’s employed population has increased from 490 million to 572 million which is an addition of 83 million jobs, out of which 40 million jobs are being created in agriculture. In this new addition of jobs, 38 million are women. Interesting to note that the share of men within people employed in agriculture has consistently declined over the years since 1983 but in case of women the share has increased since 2017. The share of both young and old women in agricultural activities have increased in the recent past. Studies have commented on this recent rise in feminisation of agricultural workforce and that is largely explained by the rise in unpaid family labour that contributes to this process. Another related fact is a four-fold increase in the number of women in own-account self-employment which is primarily related to economic activities organised at the household without hiring any paid labour. The rise in the number of such own account enterprises is nothing but a manifestation of survival strategy in absence of any option for gainful employment. The figures shared by successive PLFS reports of the government also suggest that the earnings of self-employed in India are less than the average income of salaried workers in India and average salaries of both men and women have almost stagnated. This is a clear sign of an involuntary reversal of women from non-agricultural activities towards agriculture, once again being forced into unremunerative household activities. It is also partially driven by higher migration and circulation of labour force where the men members are increasingly forced to find jobs away from their place of residence and women members are stuck to household activities taking care of family and other activities necessary for their survival. If we see the overall pattern of women employment over the years there are significant changes in the sectoral pathways of their employment, that is, the stereotypes are breaking fast. Young women who are employed in non-agriculture are finding employment in manufacturing, IT, business service, automobile industry and so on while a vast majority is pushed out of non-agriculture which is essentially distress driven.

Declining Enrolment

One of the important trends in the past four decades is the significant rise in educational enrolment of youth in India together with declining employment. During the period 1983-2023 among men of 15-19 years enrolment increased from 49 per cent to 73 percent and for women it increased from 38 per cent to 68 percent. For the older cohort the rise had been sharper since 2004. Enrolment has significantly increased for the scheduled caste and scheduled tribes as well. This was also driven by increased access to education due to rise in college density that increased from 29 colleges per lakh youth in 2010 to 45 colleges per lakh youth in 2021. However, this increased access was largely driven by increasing number of private institutions, hence the access turned out to be highly skewed in favour of richer households.

The surge in enrolment in higher education however faces a reversal in the recent past. The share of young men in education fell from 38 per cent in 2017 to 34 per cent in 2024 and the reason of withdrawal as mentioned by 72 per cent of the respondents was the need to support the household. This trend reflects low expectation of job availability as well as falling skill premium with rising educational attainments. Within the age group 20-29 those who are unemployed 67 per cent of them are educated graduate and above. On the other hand, only 6.7 per cent of those employed in salaried jobs are educated graduate and above. All these figures apparently suggest a demand supply mismatch which is also pushing down the return to education in the recent years as the gap between earnings of graduate and non-graduate seem to be declining. This happens because educated youth are forced to opt for jobs which asks for lower skills and due to increased supply in lower segments the reservation wage also declines. This in turn impacts the supply because higher attainment of education and wait time is not likely to fetch higher returns and young people decide to withdraw from education.

But the problem is even deeper. It primarily shows that the production structure is not yet ready to absorb the growing educated labour force implying continued reliance on low-skilled cheap labour. This is apparently surprising when we are amid a new wave of technology which is increasingly dependent on cognitive capabilities that could hardly be attained through traditional means. A growth trajectory which pulls young people both men and more women towards agriculture and non-remunerative self-employment activities would hardly encourage young people in attaining education. This is also reflected by a low labour force participation rate of age group between 15-29 which is 43 per cent indicating that majority of young people are not in the labour force meaning they are neither working nor available for work. They are discouraged due to very little hope of getting jobs and this is the dismal picture of India’s demographic transition.