India’s Economic Growth is on Track, but Job Creation Remains a Challenge
India’s economy is expected to grow steadily, but concerns about job creation and weak household consumption may limit its long-term potential. A recent Reuters poll of 48 economists conducted between October 21-28 indicates that while growth will stay robust, employment generation and spending remain key challenges.
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Steady Economic Growth
India’s GDP is forecasted to grow by 6.9% in FY 2024-25, marginally below the IMF’s estimate of 7%, and further slow to 6.7% in FY 2025-26 and 6.6% by FY 2026-27. While last year’s 8.2% growth reflected strong government spending, economists stress that growth must exceed 8% over several years to generate sufficient jobs for millions entering the workforce annually.
Job Creation: Limited Progress
According to the poll, 15 out of 28 respondents expect only a mild improvement in job creation, while 9 believe it will remain unchanged. Kunal Kundu, India economist at Societe Generale, highlighted that struggling MSMEs and negative real wage growth are key factors holding back employment. Public-sector jobs remain scarce, and private investment has stagnated for the past decade.
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Consumer Spending: Recovery Faces Headwinds
Household consumption, which contributes 60% to GDP, has picked up slightly but is likely to moderate in the coming months. Rising inflation is forcing households to cut back on essentials and dip into savings. 19 out of 28 economists expect only a mild increase in private consumption over the next year
Structural Reforms Needed for Sustainable Growth
The lack of private investment hinders employment creation and broader economic recovery. Economists urge policymakers to introduce structural reforms and support key sectors like MSMEs to unlock investment and generate jobs. Without such changes, growth will remain uneven, benefiting only select industries, and limiting progress toward inclusive economic development.
Conclusion
India’s economic outlook remains positive, but sustained growth requires more than just high GDP numbers. Policymakers must focus on job creation, wage improvements, and private investment to ensure that the growth trajectory translates into broad-based prosperity. Household spending and employment are critical levers for long-term stability, and without addressing these issues, economic momentum may weaken in the years ahead.