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India's Job Growth Key: How Skilling and Small Enterprises Can Boost Employment

A new NCAER report pinpoints skilling and small enterprise productivity as the twin engines for job creation in India. It warns that the current employment growth is heavily reliant on self-employment, which often represents economic necessity rather than vibrant entrepreneurship. The analysis suggests that strategic investments in formal skilling could generate millions of new jobs in key sectors by 2030. Ultimately, the path to inclusive growth lies in boosting the capabilities of India's smallest businesses and its workforce.

Key Points: NCAER Report on Skilling and Small Enterprises for India Job Growth

  • Report highlights self-employment rise masks a slow transition to a skilled labor force
  • Strengthening labor-intensive manufacturing and services can sustain 8% GDP growth
  • Upskilling workforce, especially with new tech and AI, offers significant employment benefits
  • Targeted policy support in textiles, tourism, and health can create inclusive, large-scale jobs
2 min read

Skilling and small enterprises key to boost employment growth in India: NCAER

NCAER report reveals boosting skilled workforce and small enterprise productivity is crucial for driving employment growth and achieving Viksit Bharat goals.

"India must confront the reality that its employment future is tied to the productivity of its smallest enterprises. - Professor Farzana Afridi, NCAER"

New Delhi, Dec 12

An increase in skilled workforce and productivity of small enterprises can act as key drivers of job creation in the country, according to a report by the National Council of Applied Economic Research (NCAER).

The report authored by Professor Farzana Afridi and her team of researchers at NCAER highlights the need to overcome bottlenecks in increasing both the quality and quantity of workforce participation and labour productivity.

The increase seen in employment is primarily due to the rise in self-employment, while the transition to a skilled labour force has been slow.

Strengthening employment opportunities in labour-intensive manufacturing and services sectors could help sustain GDP growth at around 8 per cent, consistent with the vision of Viksit Bharat, the report said.

“India is on track to become the world’s third largest economy, and while its per capita GDP currently ranks 128th, this highlights valuable opportunities to prioritise employment and inclusive growth,” said Manish Sabharwal, Vice Chairman, NCAER, at the launch of the report.

Afridi called the dominance of self-employment in India an “economic necessity rather than entrepreneurial dynamism”.

“Just like small farmers, most of the small enterprises function at the subsistence level. India must confront the reality that its employment future is tied to the productivity of its smallest enterprises,” Afridi said.

The main challenge is that the unincorporated household enterprises operate with low levels of capital, productivity, and technology adoption.

Further, the report suggested that India’s workforce could benefit greatly from upskilling, particularly with the advent of new technologies and AI.

Medium-skilled jobs dominate employment growth, especially in services, whereas manufacturing remains low-skill intensive.

“Increasing the share of skilled workforce by 12 percentage points through investment in formal skilling could lead to more than a 13 per cent increase in employment in the labour-intensive sectors by 2030,” it said.

Simulations in the report also showed that increasing the formally skilled workforce under the moderate growth scenario could lead to significant job gains in the labour-intensive sectors.

“Increasing the share of skilled workforce by 9 percentage points could generate 9.3 million jobs by 2030,” it said.

The report recommended targeted interventions to unlock employment potential in specific sectors.

In manufacturing, reorienting production-linked incentives towards labour-intensive industries such as textiles, garments, footwear, and food processing can yield higher job multipliers.

In services, policy support for tourism, education, and health can create large-scale, inclusive employment.

- IANS

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Reader Comments

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Sarah B
As someone working in the development sector here in India, I see this daily. Self-employment is often survival, not choice. The line about "economic necessity rather than entrepreneurial dynamism" is painfully accurate. Providing these micro-entrepreneurs with access to technology and credit is the real game-changer.
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Arjun K
Good analysis. But I respectfully disagree on one point. While skilling is important, we also need to create the jobs first. What's the use of skilling millions if there are no factories or companies to hire them? PLI schemes should 100% focus on labour-intensive sectors like textiles. Jai Hind!
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Priyanka N
Tourism, education, health! These are goldmines for employment, especially for women in smaller cities. If we can improve infrastructure and training in these service sectors, it will create sustainable jobs. Hope policymakers are listening to NCAER.
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Michael C
The AI and upskilling angle is critical. The world is moving fast, and our workforce needs to keep pace. It's not just about basic skills anymore. We need public-private partnerships for advanced technical training to avoid a future skills gap.
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Kavya N
My father runs a small fabrication unit. The struggle is real - old machines, no formal training, and constant cash flow problems. If the government could help with easy loans for tech upgrades and provide skill certificates for workers, it would make a huge difference. This report understands the ground reality.

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