Unemployment a Big Challenge

Special Economic Article

Prime Minister Narendra Modi recently completed 11 years in office. While India is emerging as an economic power on the global stage, there remain some areas of concern domestically. Here’s an overview of the economic successes and shortcomings during this period.

Under Prime Minister Modi’s leadership from 2014 to 2025, India has achieved significant progress in several sectors. The country has made remarkable advances in infrastructure, with massive investments in highways, ports, railways, metro systems, and digital infrastructure.

Flagship programs like Gati Shakti, Bharatmala, Sagarmala, and UDAN have extensively connected urban and rural areas. The length of national highways increased from 91,287 km to 146,204 km. Major projects like the Atal Tunnel and Chenab Bridge were completed. Railway track length rose from 14,000 km to 31,000 km.

**Declining Investments**

Various social schemes aligned with economic goals have had a notable impact on people’s lives. Under the Ayushman Bharat scheme, 500 million citizens received health insurance worth ₹5 lakh each. However, healthcare services and medicines have become more expensive for the common man. There has been a significant increase in business and entrepreneurship. Last year’s budget included a capital expenditure plan of ₹11 lakh crore.

While government spending is rising, private investment appears to be lagging. There is little sign of private investment in industry and trade. This can be attributed to global instability and the shadow of war-like situations. The government’s efforts to mitigate risk for entrepreneurs seem insufficient. Long-pending reforms in land and labor sectors remain unresolved, dampening investor enthusiasm.

The multidimensional poverty index dropped from 53.8% in 2005-06 to 15.5% by March 2023. Extreme poverty has declined, with 269 million people lifted out of it. Yet, slums, poverty, inequality, and poor health persist. According to official data, 170 million new jobs have been created and the unemployment rate has fallen to 3.2%. However, unemployment remains high in both rural and urban areas. While youth employability has increased, job creation has not kept pace. Development remains uneven, with widening gaps between the “haves” and “have-nots” and between urban and rural areas.

**Digital Fraud**

With the rise of the IT sector and widespread digitalization, India, now the world’s most populous country, has achieved unprecedented success in financial inclusion and the digital economy. Over 500 million bank accounts have been opened under the Jan Dhan Yojana, though many remain dormant. Cyber fraud and financial crimes have surged. India leads the world in digital payments via the Unified Payments Interface (UPI), accounting for 45% of global digital transactions.

Direct benefit transfers linked to Aadhaar have brought about a revolution, plugging leakages in government subsidies. The basic income tax exemption limit has risen from ₹2.5 lakh to ₹12 lakh.

The disposable income of the middle class has increased. In 2015, the wealth tax was abolished. Indirect taxes have been streamlined, improving efficiency and expanding the formal economy. However, income inequality has grown. The Goods and Services Tax (GST) has significantly boosted government revenue.

On the other hand, the GST system remains complex and burdensome, and the central government has not succeeded in building trust among taxpayers. Tax slabs have not been reduced as expected. The reduction of corporate tax from 30% to 22% is a welcome step.

**Limited Growth in Manufacturing**

The goal of raising manufacturing’s share of GDP to 25% remains unachieved; it currently stands at 15-17%. The Indian economy has grown at 7.1% over the past 11 years. In 2014, India was the world’s 10th largest economy; by 2021, it was 5th, and in 2025, with a nominal GDP of ₹330.7 lakh crore, it has become the 4th largest. In the last decade, GDP has more than doubled.

Despite good schemes under Atmanirbhar Bharat, Make in India, and production-linked incentives for pharmaceuticals, textiles, electronics, and semiconductors, manufacturing growth has not been robust. Multinational companies like Apple, Samsung, and Foxconn have increased production in India. The Tata Group has also made significant advances. Still, the sector faces bureaucratic hurdles. The Modi government has made progress in social welfare and rural development through schemes like PM Kisan, Swachh Bharat, Ayushman Bharat, PM Awas Yojana, and Ujjwala, leading to a manifold increase in access to cooking gas, toilets, and housing.

However, agriculture and environment have not been handled sensitively. Agriculture employs about 45% of the workforce, but its contribution to GDP is only around 15%. Agricultural laws were enacted without broad discussion, leading to protests and their eventual withdrawal. This was not ideal. Respecting opposition and engaging with their views is essential in a democracy. Environmental concerns are rising due to increased sugarcane cultivation, stubble burning, and deforestation, but the government does not appear to be taking these issues seriously.

**Job Creation**

Despite significant achievements over the past eleven years, there have been failures as well. With a projected population of 1.55 billion, India still lags in job creation. Economic growth has not translated into proportional employment growth. Formal sector jobs are limited; most employment is informal, which is not a sign of a robust economy. Wealth concentration has increased, and incomes in the middle class and rural areas lag behind urban elites and corporate profits. Growing income inequality is a major flaw in an emerging economy.

Opposition parties claim that the Modi government has achieved nothing in eleven years, which is completely untrue. Active media, judiciary, and opposition keep Indian democracy vibrant. Next week marks fifty years since the Emergency. While progress has been made in ease of doing business, administrative inefficiency, apathy, and corruption remain widespread in daily life. Comprehensive progress is still needed on the economic front. Social harmony is declining. There is a rise in hooliganism and arrogance in politics and society, and tolerance is waning. Religious and caste-based politics are erupting everywhere.

According to World Bank estimates, India will become the world’s third-largest economy by 2028. State Bank of India reports that per capita GDP has increased 2.6 times in the last eleven years and now stands at ₹2.35 lakh. Overall, if economic reforms become deeper, more inclusive, and prioritize sustainable development, India is certain to move towards becoming a major economic power in the coming decade.

*(The author is a senior economic journalist and former bank director)*