India’s manufacturing sector is rebounding with increased employment, but the country must leverage its demographic advantage to address ongoing unemployment challenges.
THE ANNUAL SURVEY OF INDUSTRIES (ASI) for 2022-23, released by the Ministry of Statistics and Programme Implementation, has revealed a silver lining for the manufacturing industry in the country, which had taken a significant hit during the COVID pandemic.
The report showed that the total number of employees in manufacturing industries increased by 7.5 percent to 1.84 crore in 2022-23, up from 1.72 crore in 2021-22. It noted that this was the highest rate of increase in employment in manufacturing industries in the last 12 years.
According to the data, the highest employment was recorded in factories producing food products, followed by textiles, basic metals, wearing apparel, and motor vehicles, trailers, and semi-trailers. NITI Aayog CEO BVR Subrahmanyam stated that this suggests the impact of the COVID pandemic has been “wiped out” and that the manufacturing sector is “now on the upswing.”
The survey indicated that the total number of factories increased from 2.49 lakh in 2021-22 to 2.53 lakh in 2022-23, marking the first year of full recovery after the pandemic. The Ministry noted that the main drivers of manufacturing growth in 2022-23 were industries related to basic metals, coke and refined petroleum products, food products, chemical and chemical products, and motor vehicles.
While this is good news for the country, the fact remains that India is still far from utilizing the full potential of its workforce. It is one of the youngest countries in the world and the youngest among major nations in terms of median age.
India’s median age, which touched a low of 24 years in 2021, is now 27 years and is expected to increase to 28-29 years within a year.
It is evident that the country is currently experiencing a golden period, but time is running out. The government must take initiatives to tap this potential. As the median age steadily rises, the population will age, turning our current advantage into a disadvantage. In the next three to four decades, we will be among the aging countries.
China, whose median age is now 39.5 years, up from 34.5 years in 2011, has already started facing the consequences of a higher median age and an increasing number of older people. It was recently forced to raise the retirement age from 60 to 63 years and is taking several other steps to prepare for an elderly population. Japan has the world’s oldest population, with a median age of over 55 years.
India now has roughly 25 percent of the world’s workforce. This figure has shown an increasing trend since 1971 and is projected to rise to 65.2 percent by 2031, according to an official report. This bodes well for the country’s productivity.
Another factor that planners must consider is that the country’s population growth rate is declining, with the average annual exponential growth dropping from 1.63 percent in 2011 to 1.2 percent in 2024. The highest growth rate (2.22 percent) was recorded in 1971.
The decline in the growth rate indicates that India’s population will accelerate at a comparatively lower pace over the next decade, despite an increase in absolute numbers.
Therefore, while the increase in manufacturing jobs is good news, the country has a long way to go to reduce unemployment and underemployment.
The Periodic Labour Force Survey (PLFS) for the period July 2023 to June 2024, issued by the Labour Bureau last week, showed no significant change in India’s unemployment rate, which remained at 3.2 percent in 2023-24 after five years of reduction.
Self-employment remains the primary source of employment at 55.8 percent, while casual and regular employment accounted for 22.7 percent and 21.5 percent, respectively. The total youth unemployment rate stands at 10.2 percent, with females at 11 percent and males at 9.8 percent.
An international group recently calculated that India will need to create approximately 12 million jobs each year over the next decade to accommodate the influx of new labor market entrants.
As India’s demographic advantage grows, it could serve as a powerful multiplier for economic growth in the coming years. This potential must not be wasted at any cost, and the focus must shift away from issues of caste and creed to make India ‘Viksit Bharat’ in the true sense of the word. 
Vipin Pubby
The author, a freelance journalist, is a former Resident Editor of Indian Express, Chandigarh, and reported on the political developments in Jammu and Kashmir, North-Eastern India, Gujarat, Himachal Pradesh, Haryana and Punjab in his long, illustrious career.
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