ECONOMY
India must grow at 12.2% to avoid slipping into a jobs trap of underemployment
- IBJ Bureau
- Oct 01, 2025
India’s economy needs to expand at an extraordinary 12.2 per cent pace each year to solve its underemployment crisis, Morgan Stanley economists have warned. They stress that any lower rate of growth risks millions of young Indians remaining locked out of productive work, fuelling social strains at home.
The South Asian nation’s labour market is facing a dual challenge of unemployment and underemployment, Morgan Stanley economists led by Chetan Ahya have written in a note. The youth jobless rate stands at 17.6 per cent, the highest in the region, while a surge of workers into agriculture has pushed farm employment to a 17-year high, according to their note.
Without stronger growth in industries and exports, accelerated rollout of infrastructure and sweeping reforms to upgrade skills and improve the business climate, India risks falling into a jobs trap, the Wall Street firm has warned. That would not only slow its ambition of becoming the world’s next growth engine but also intensify pressure of outward migration even as H-1B visas are becoming costlier.
Underemployment refers to those jobs that do not fully utilise the skills, education or available work hours of a person. Unlike joblessness, underemployment is difficult to measure, especially when the definition of employment is loose. India counts anyone working at least one hour in the past week as employed, including unpaid family labour, leading to significant underemployment where most of the jobs are informal.
Report By
View Reporter News