Atmanirbhar Bharat will drive employment and economic growth

This article is authored by C Jayakumar, CHRO, Larsen & Toubro.

India’s employment landscape is undergoing a significant transformation. Fuelled by the government’s Make in India, Atmanirbhar Bharat and Production Linked Incentives (PLI) schemes, the employment rate has grown significantly. Launched to transform India into a global manufacturing hub, the Make in India initiative focuses on 25 key sectors by simplifying regulatory processes and developing world-class infrastructure. By creating an environment conducive to investment, innovation, and entrepreneurship, this initiative aims to boost domestic manufacturing, create employment, attract foreign direct investment (FDI), and enhance India's global competitiveness.

As we neared the end of 2022-23, there was near-consensus on real growth. The cited figure was between 6.8 and 7%. There is less consensus for 2023-24 and the medium-term. An optimist will say 6.5%, a pessimist 5.5%. An enthusiastic optimist will place it at 7%, a dire pessimist at 5%. While that’s a fairly broad band, there is no denying the Indian economy’s growth resilience. (Shutterstock)

Atmanirbhar Bharat, with its emphasis on self-reliance, import reduction, and domestic production growth, is creating a wave of opportunities. Investments in digital infrastructure, expansive physical projects, Goods and Services Tax reforms, and technology-driven service delivery are poised to generate jobs, particularly in white-collar sectors.

India’s demographic dividend is a key advantage. With a young population (average age of 28.4) and a growing working age group, India stands in stark contrast to aging populations in developed nations. The International Labour Organization (ILO) reports India’s Labour Force Participation Rate (LFPR) at 52%, significantly lower than the United States (73%), China (76%), and the United Kingdom (78%). By increasing LFPR by just one percentage point annually, India could create a staggering 95 million non-agricultural jobs over the next 25 years, reaching a 70% LFPR.

Additionally, shifting global trade winds further bolster India’s position. The US’ focus is shifting from China to India, attracted by competitive costs, abundant labour, and a booming domestic market. Streamlined regulations and an enhanced business environment are attracting significant FDI, further fuelling job creation.

The Indian government's concerted efforts towards job creation and skill development outlined in the Union Budget 2024-25 are a significant stride in the right direction. The introduction of employee-led incentive schemes and the substantial allocation for skilling initiatives reflect a forward- thinking vision to harness India’s demographic dividend effectively.

These measures will not only help productively engage our growing workforce but drive sustainable productivity growth and economic prosperity. By modernising and upgrading industrial training institutes and supporting entry-level first-time employees, we can bridge the skill gap and ensure our youth are industry-ready. This proactive and pragmatic approach will play a vital role in achieving our collective goal of a Viksit Bharat—an empowered, inclusive and developed India.

PLI schemes are a cornerstone of India’s Atmarnirbhar plan. With a 33% increase in budget for FY2025 (Rs. 6,200 crore), these schemes, spanning 14 sectors have already attracted over ₹1.03 lakh crore in investments and generated employment for over 6.78 lakh individuals. Additionally, initiatives like the PM Mudra Yojana (PMMY) has spurred unprecedented growth in the MSME sector, creating employment for over 15 crore individuals, including 3.4 crore women. The Aatmanirbhar Bharat Rozgar Yojana (ABRY), has surpassed its initial target, enrolling over 7.57 million new employees.

In tandem with these efforts, the National Manufacturing Policy (NMP) aims to increase the manufacturing sector's Gross Domestic Product (GDP) share to 25% and create 100 million jobs by establishing National Investment and Manufacturing Zones (NIMZs) and simplifying business regulations. This policy supports the broader objectives of Make in India and Atmanirbhar Bharat, fostering a robust manufacturing ecosystem that drives economic growth and employment.

These initiatives reflect a comprehensive approach to economic growth, empowering India's youth, and leveraging our strengths. They underscore the potential for an economically strong and socially inclusive India, poised for sustained growth and development.

However, the skills gap remains a challenge. According to the World Bank, only 24% of India's workforce is adequately skilled for the digital economy, highlighting the need to reskill the majority of workers.

Vocational training and upskilling programmes are crucial to bridge this gap and adequately prepare the youth for the future.

• NEP 2020: The National Education Policy (NEP) 2020 advocates integrating vocational and academic education, aiming to equip 50% of students with vocational skills by 2025. This extends training from school to higher education, aligning education with industry needs.
• Expanding apprenticeships to white-collar jobs: Traditionally associated with blue-collar roles, apprenticeships are now extending to white-collar sectors like IT, finance, and health care, offering practical skills and hands-on experience.
• The power of upskilling: Continuous upskilling is essential for employability and economic growth. It fosters a skilled and innovative workforce, enhancing productivity and propelling economic progress.
• Promoting diversity, equity and inclusion for sustainable development: Diversity, equity, and inclusion (DEI) are not just moral imperatives but strategic necessities for India's continued economic resurgence. By providing equal opportunities, companies unleash a wider talent pool, driving innovation and productivity. Diverse teams outperform homogenous ones, leading to higher revenues and shareholder returns. DEI is integral to India's journey towards self-reliance, ensuring that every individual's potential fuels national prosperity.

As India moves towards becoming Atmanirbhar and a global economic leader, the focus on employment generation, vocational training, and inclusivity remains paramount. The transformative impact of these initiatives is already evident. By leveraging these strengths, India can ensure sustainable economic growth and a prosperous future for all. Supporting the government's vision through strategic investments in talent development, fostering innovation, and embracing diversity will build a self-reliant India, standing as a beacon of economic strength and inclusive growth.

This article is authored by C Jayakumar, CHRO, Larsen & Toubro.