NEW DELHI: India needs to create 10 million jobs annually to maintain an average 6.5% gross value-added growth, investment bank Goldman Sachs has estimated and suggested three policy focus areas to raise the country’s employment rate.
The suggested three areas of focus include incentivising ‘affordable social housing’ development in the construction sector, diversifying locations of IT hubs and GCCs to Tier-2 and Tier-3 cities and re-allocating fiscal incentives towards labour-intensive manufacturing sectors.
In its latest report on India’s job market, Goldman Sachs said the real estate sector employs 80% of the workforce in the construction sector and providing incentives to affordable social housing development would help create jobs. Similarly, diversifying IT hubs and GCCs to smaller cities help ease resource pressures in top cities and create jobs in smaller towns.
“In our base case scenario, we estimate that around 10 million jobs need to be added annually (higher than the last 23 years’ average of ~8.5mn) in order to maintain 6.5% year-on-year GVA growth (on average) from FY25 to FY30. In this scenario we assume the real investment rate to increase from 33.5% in FY24 to 36.1% in FY3016,” the report said.
Employment generation has come to the centre stage as several experts say 7% growth is not creating enough jobs. Govt has unveiled a series of measures, including an incentive scheme, to step up internships in top companies.
The report which worked out job creation under different scenarios said under optimistic scenario, if economy grows at around 7% over next six years, on an average 14 million jobs are likely to be added annually, with an estimated increase in real investment rate to 38.2% in FY3017.
“In our bear case scenario, if the Indian economy is to grow at around 6% year-on-year over the next six years, on an average 5 million jobs are likely to be added annually, coupled with a marginal increase in real investment rate to 34% by FY3018,” said the report.