Why keeping youth discontent in check remains Indian PM Modi's biggest challenge

Narendra Modi's biggest challenge as India's Prime Minister is addressing the discontent among the youth, according to a headline piece. The issue came to a head after Gen-Z protesters took to the streets in protest of repeated entrance exam paper leaks. In response, Modi appointed Nandan Nilekani to lead a reform effort for the examination system and established fast-track courts for those accused in the leaks.

However, while these actions may quell immediate discontent, the underlying problem of youth unemployment and a lack of better livelihood opportunities persists.

Experts argue that India's structural weaknesses in its economy and education system contribute to the crisis. With over 360 million youth between the ages of 15 and 29, India has the world's largest youth population. While education enrolment has improved, the transition from education to employment remains a major challenge. Graduate unemployment has hovered around 35-40% for the past 25 years, but recent demographic and educational growth has exacerbated the problem.

The quality of education is a significant issue, as graduates struggle to find employable skills and job prospects. Despite adding approximately five million graduates annually, only around 2.8 million find employment, and an even smaller percentage secure permanent salaried jobs. The expansion of graduates has not been matched by corresponding growth in graduate employment, resulting in rising graduate unemployment and stagnant earnings.

Experts suggest that India needs to focus on reviving manufacturing and creating new industries to address the labor market challenges. The share of GDP from manufacturing has declined from 17% in 2015 to 14% currently, and manufacturing employment has fallen since 2015. Additionally, disguised unemployment in agriculture, driven by a lack of good jobs, further compounds the problem.

The impact of technology, particularly artificial intelligence, on job creation is another concern. Wall Street Bank Goldman Sachs estimates that 8-12% of non-farm jobs in India are at risk of being substituted by AI. As a result, hiring in the IT sector has risen in single digits, and contract work has become unstable. The knowledge-based jobs that Indian STEM graduates once relied upon are decreasing in number.

To tackle these challenges, young Indians will need to adapt to the changing job market and acquire vocational skills. Education institutions must shift their focus from knowledge-based learning to providing practical skills that match the demands of the job market. This change is necessary to prepare young Indians for the realities of a rapidly evolving job market.