India’s demographic dividend risks becoming a demographic disaster due to high unemployment, underemployment, inadequate skill development and regulatory hurdles which prevent the rise and growth of employment generating industries. Economist Jayati Ghosh refers to India’s current demographic situation as “a ticking time-bomb,” highlighting the challenges faced by educated individuals who are unable to find suitable employment. She emphasizes that this issue represents not only a potential economic loss but also the emergence of a “lost generation.”
As the Union Budget 2025-26 approaches, the Confederation of Indian Industry (CII) has submitted a comprehensive seven-point agenda aimed at bolstering employment generation and leveraging India’s demographic dividend. This agenda strives to transform the youth demographic into a thriving workforce instead of one that is lost. With a population of 1.45 billion and a median age of just 29 years, India stands at a pivotal moment. Over 133 million individuals are projected to join the working-age population by 2050, making mass employment generation critical for driving inclusive growth and harnessing this demographic potential.
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CII Director General Chandrajit Banerjee highlights the dual focus on employment and productivity, emphasizing the need to further reduce India’s Incremental Capital Output Ratio (ICOR) from its current level of 4.1. He also advocates for an expert committee to explore ways to enhance productivity alongside job creation. Against this backdrop, CII’s recommendations serve as a blueprint to secure India’s future as a global economic powerhouse. Here’s a detailed look at their proposals and their potential benefits:
1. A Unified National Employment Policy
CII proposes the creation of an integrated National Employment Policy to consolidate various employment-generating schemes across ministries and states. This unified approach could improve coordination, reduce redundancy, and ensure targeted impact.
Benefits:
- Streamline existing schemes to prevent overlap.
- Promote equitable employment opportunities across regions.
- Enhance resource allocation for maximum impact on job creation.
2. Integrated Employment Portal and Universal Labour Information Management System (ULIMS)
Building on the National Career Service (NCS) platform, CII suggests an integrated employment portal under a Universal Labour Information Management System (ULIMS). The platform would centralize data on employment opportunities, skill demands, and training projections.
Benefits:
- Create a real-time database for job seekers and employers.
- Align training programs with industry demands to boost employability.
- Provide insights for policy decisions based on data-driven projections.
3. Encouraging New Employment Through Tax Incentives
CII recommends replacing Section 80JJAA of the Income Tax Act with a broader provision under Chapter VIA. The new section would incentivize businesses hiring new employees, with conditions to prevent misuse.
Benefits:
- Encourage businesses to expand their workforce.
- Ensure fair usage by excluding hires resulting from business reorganization.
- Offer tax relief even under concessional tax regimes, promoting wider adoption.
4. Support for Employment-Intensive Sectors
CII emphasizes targeted support for sectors like construction, tourism, textiles, and low-skilled manufacturing. Synchronizing tariff structures, Production/Employment Linked Incentive Schemes, and Free Trade Agreements (FTAs) could stimulate exports and job creation.
Benefits:
- Drive growth in sectors with high employment potential.
- Boost India’s export competitiveness in global markets.
- Provide livelihood opportunities in rural and urban regions alike.
5. Internships for Rural Youth
To bridge the gap between education and employment in rural areas, CII proposes internship programs in government offices for college-educated youth.
Benefits:
- Offer short-term employment and valuable work experience.
- Enhance the employability of rural graduates.
- Promote skill development and reduces urban migration.
6. Increasing Women’s Workforce Participation
Recognizing the untapped potential of women in the workforce, CII suggests initiatives like CSR-funded dormitories, government-supported creches in industrial clusters, and formalizing the care economy.
Benefits:
- Empower women economically, boosting household incomes.
- Reduce barriers to women’s employment, especially in rural and industrial areas.
- Drive inclusive growth by tapping into a largely underutilized talent pool.
7. Social Security for Gig Workers and International Mobility
CII advocates the rollout of Labour Codes to ensure social security for gig and platform workers, a rapidly growing segment of India’s workforce. Additionally, setting up an International Mobility Authority under the Ministry of External Affairs could facilitate global workforce deployment.
Benefits:
- Provide financial and health security to gig workers, fostering stability.
- Position India as a key global talent supplier amid global workforce shortages.
- Expand opportunities for Indians in international job markets.
This strategic roadmap from CII is not just a call for action but a well-rounded strategy to address India’s employment challenges. The upcoming Union Budget presents a unique opportunity to institutionalize these recommendations and set the stage for sustained economic growth and social transformation.
To conclude with the words of Nobel laureate economist Amartya Sen aptly, “A country does not grow because of its population; it grows because of its people’s capabilities.” By implementing these strategies, India can transform its demographic advantage into an engine of growth and prosperity.
