New book traces how the country squandered its demographic dividend

 

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A new book by economists Santosh Mehrotra and Jajati Parida argues that India is squandering its demographic dividend even as the country's labour market slides deeper into crisis. In "India Out of Work: Rethinking India's Growth Story," released via Bloomsbury, the authors write that non-farm job creation has stalled at a time when it is most needed, and that the formal sector, which offers security and fair wages, remains stagnant. This has pushed a growing share of the workforce into informal or unpaid work, which the authors say now accounts for just over 90 per cent of all employment.

The book pays particular attention to the crisis among educated youth, whose unemployment has risen sharply over the past decade after being largely flat before that. 

Mehrotra and Parida cite National Crime Records Bureau data analysed by the India Mental Health Observatory showing that people aged 18 to 45 accounted for the bulk of suicides in 2021 and 2022, with daily wage earners, the self-employed and professionals recording the highest numbers, alongside a significant toll among housewives. 

The authors connect this distress to a swelling population of "discouraged workers" who have simply stopped looking for jobs, and to the rise of NEET youth (not in education, employment or training), a group that crossed 100 million in 2020, up from roughly 50 million in 2012, and has stayed above that mark since.

A central argument of the book is that India is now witnessing a reversal of structural transformation rather than the shift away from agriculture that usually accompanies economic development. 

The authors write that around 80 million people rejoined agriculture between mid-2020 and mid-2025, a movement they attribute not to farm modernisation but to the failure of industry and services to absorb workers, including a five-year contraction in manufacturing employment beginning in 2016. Much of this reverse migration, they note, has disproportionately pushed women into unpaid family labour.

The book also situates India's employment troubles within a longer demographic comparison with China. Mehrotra and Parida trace how India, despite starting with a lower population density than China in 1950, ended up overtaking it in total population because of comparatively weaker investment in education and health through the 1990s. 

They argue this has left India with a much larger, but less productive, workforce, compounded by rising population density in Indian cities that has made them increasingly unliveable. With India's demographic dividend estimated to close by around 2040, the authors frame the creation of adequate formal, non-farm jobs as an urgent first challenge, one they say is essential to sustaining growth above 9 per cent annually over the next decade.

Mehrotra is a professor of economics at the Centre for Labour, Jawaharlal Nehrunagar University, and Parida is professor of economics at the University of Hyderabad. 

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This article is based on the book's excerpt published by CFA