Violent protests erupted across many parts of the country on June 15 after the Centre announced the Agnipath scheme for short-term recruitment into the armed forces. The violence is unfortunate, given how rare it is to see youngsters protest about the lack of good jobs in the country.

In January, there were widespread protests over a change in the terms of employment with the Indian Railways that angered India’s youth. Protests like the current one deserve deeper reflection as they reflect India’s grave youth unemployment crisis.

India’s youth has been patiently suffering for the past few years. The Narendra Modi-led government has not only failed its promise to provide two crore jobs to the youth every year but it has also brought the Indian economy to a point where the processes or outcomes of economic growth – if any – are barely creating good jobs for those seeking them.

The poor performance of organised, job-creating sectors, including the Micro, Small and Medium Enterprises manufacturing segment, has made the situation worse. Here’s a look at some data on India’s unemployment.

Figure 1: Unemployed persons actively looking for employment- by region and gender between 2016-'17 to 2021-'22. Credit: Author’s calculations from CMIE database.
Figure 2: Unemployment rate (%). Credit: Author’s calculations from CMIE database.

Beyond the concern that good jobs are not being created, the inherent problem of poor work contracts, ad hoc contractualisation and de-unionisation in the workforce has degraded the quality of secure jobs.

This has made more workers wary of finding appropriate jobs in the current labour market, leading to employees either exiting the labour force, being reluctant to seek work, or turning to self employment – leading to more entrepreneurs than salaried workers. See figure three below:

Figure 3: Labour participation rate by region and gender. Credit: Author’s calculations from CMIE database.

In figure four below, observe India’s overall employment rate by region and gender for the period of 2016-’17 following demonetisation to 2021-’22. The total employment rate, which was just 42.79% in 2016-’17, has fallen to 37.02% in 2021-’22. For urban areas, it reduced from 40.72% in 2016-’17 to 34.44% in 2021-’22 and for rural areas it has come down from 43.83% to 38.34%.

Figure 4: Employment rate by region and gender. Credit: Author’s calculations from CMIE database.

In addition, consider the women’s employment rate. It has fallen from 11.88% in 2016-’17 to 7.96% in 2021-’22. In the case of urban women, it is down from 10.77% in 2016-’17 to 5.57% in 2021-’22. In the case of rural women, most of whom work in the unpaid farm sector, for those within the limited organised employment space have seen their numbers reduce from 12.45% in 2016-’17 to 9.19% in 2021-’22.

What about the states?

Most protests against the Agnipath scheme began in states such as Bihar, Uttar Pradesh and quickly spread across most of North India and then to parts of the south, especially Telangana. State-wide unemployment numbers tell a story here.

Until May, estimates by the Centre for Monitoring Indian Economy showed that Bihar’s unemployment rate is 13.3%, Haryana 24.6%, Rajasthan 22.2%, Delhi 13.6%, Jharkhand’s 13.1%, in Jammu and Kashmir it is 18.3%. The northern states where unemployment is worse is where the protests against Agnipath have been concentrated as well.

Aspiring youngsters, in the absence of good opportunities, work towards securing employment in the traditionally protected or secured job of the central or state agencies, the railways and the armed forces.

Central and state government vacancies, however, have remained at status quo with little to no hiring in the last few years. The private sector has little need of hiring more employees given the demand-side crisis that has been affecting India’s manufacturing sector.

Creating ad hoc, short-term contractual positions through the Agnipath scheme adds to the misery, taking away an aspiring youngster’s perceived security as well.

This scheme also exposes a conflict between the government’s objectives as an employer and the aspirations of the youngsters who look forward to joining the armed forces.

As Mahesh Vyas, chief executive officer and managing director of the Centre for Monitoring Indian Economy, said:

“The Agnipath scheme limits the hiring to a four-year period with no pension or healthcare benefits after this tenure for 75 per cent of the recruits. Twenty-five per cent would be re-selected for a longer tenure and regular benefits. The interests of the government and the armed forces are well aligned in the Agnipath scheme. The government seeks a lower financial burden from future pension obligations and the armed forces seek a younger armed force of personnel below officer rank.”

Jobs in the armed forces cannot be considered a part of creating an employment guarantee scheme – as many in the government and the defence establishment are have already argued – but those making this point must also ask the question: What have the Modi government’s economic plans, vision and actions over the last eight years done to create an employment landscape that ensures secure, good jobs for the trained and educated youth?

The answer: very little.

Regarding targeted employment creation, there has been no plan or a medium-to-long term strategy implemented with a positive effect. Worse, as argued previously, the prime minister and finance minister, in the annual Union Budgets, do not even acknowledge that there is a chronic (un)employment crisis.

The inability of the government to spend more to create job-security based social safety nets – say, via the rural employment guarantee scheme or similar programmes – has been diminished as the Centre has not been able to collect revenue receipts for outlayed and planned revenue expenditure over the last five to six years. The deficit numbers provided below in figure five indicate this.

Figure 5: Credit: Author’s calculations from CMIE database

The Agnipath scheme has offered to induct youngsters aged between 17-and-a-half and 21 year. The upper limit was relaxed to 23 years, apparently to assuage the anger of those who lost out during the pandemic when hiring was suspended. The age group of those between 17.5-21 years, according to Vyas, is made up of school or college-going youngsters.

According to the data of the Centre for Monitoring Indian Economy, up till 2019, about 4% of those aged between 15-19 years were employed. In 2017, about 7% of those in this age group were employed. Since 2020 this proportion has dropped to about 2%. This is the age at which one becomes eligible to apply to enter the armed forces. The anger over Agnipath is among those in this age bracket.

This is further explained by the fact that the unemployment rate in this age group has risen from around 23% in 2017 to over 50% since 2020.

The cumulative effect of these numbers and the structural crises in the broken labour market, widening youth unemployment and poor work contracts, will affect the economic prospects of the nation, its youth and its women.

It will also lead to increased episodes of vicious repercussions – as evident from the nature of the recent protests – where there may be more violence by distracted, disorganised, unemployed youth causing irrevocable harm to the nation instead of doing good for it.

Deepanshu Mohan is an Associate Professor of Economics and Director at the Centre for New Economics Studies, Jindal School of Liberal Arts and Humanities, OP Jindal Global University.