India must boost productive jobs to harness its demographic dividend
India’s strong GDP growth must be matched by faster creation of productive jobs to fully exploit its rising working-age share.
India has maintained GDP expansion above 7 % for three years, but the country’s demographic dividend—now 68 % of the population in the working-age bracket—requires job creation to keep pace with economic output. International Labour Organization data show employment for ages 15 + accelerated after the pandemic, growing 3.5 % a year and raising the employment-growth elasticity to 0.46, a marked improvement over earlier periods.
Nonetheless, the labour force participation rate reached only 59.3 % in 2025, lagging the global average, driven largely by a female participation rate of 32 %. Informal work dominates, with self-employment at 56.2 % and casual labour at 20.2 %, indicating limited formal job growth. Agriculture employs 43 % of workers while contributing just one-fifth of GVA, and manufacturing’s share of employment has stalled at 10-12 %, underscoring a need to shift labour to higher-productivity sectors.
The services sector now provides about 32 % of jobs, yet many labour-intensive services remain under-supported. Policymakers must expand productive employment, invest in skills, and strengthen social protection for informal workers to avoid squandering the demographic advantage.
