High growth is not translated
Jayati Ghosh, an economics professor at the University of Massachusetts Amherst, said India’s recent economic growth has not translated into meaningful job creation. He said the country’s development pattern has generated an unusual combination of high growth with weak job creation.
“If you are growing at six to eight per cent in the long run, you should at least see some employment growth,” Ghosh said in a lecture organized by BML Munjal University. Instead, he said formal employment has seen little or no growth over the past decade, even during periods of relatively strong GDP expansion.
Ghosh’s comments come amid an ongoing debate among economists over whether India’s growth has created enough employment opportunities. While official data have pointed to improvements in labor force participation in recent years, concerns remain about the quality of jobs and the pace of formal employment creation.
Ghosh said employment growth remained weak even during the high growth phase between 2011-12 and 2017-18. They said virtually no expansion in formal employment is seen between 2012 and 2023-24, while women’s paid employment has declined and real wages have stagnated.
He said, this pattern makes India a leader at the global level. In most countries at a similar stage of development, rapid economic growth is usually accompanied by increasing employment and higher participation of women in the workforce.
“When countries at our per capita income levels grow so rapidly, you typically see more women entering the workforce,” she said, noting that India instead saw a long-term decline in women’s paid employment.
On recent official figures pointing to rising female employment, she said most of the increase reflected an increase in unpaid helpers in family enterprises rather than in paid jobs.
According to the Periodic Labor Force Survey released by the Ministry of Statistics and Program Implementation, the female labor force participation rate is expected to increase from 21.1 per cent in 2017-18 to 35.6 per cent in 2023-24. According to quarterly estimates, it increased to 34.9 per cent in October-December 2025 from 33.7 per cent in the previous quarter, mainly due to higher participation of rural women.
“More than 80 percent of the growth in women’s employment comes from unpaid assistants in family enterprises,” Ghosh said, adding that such work is generally not counted as formal employment in many countries.
India’s labor market is also dominated by informal work. According to government estimates, more than 90 percent of the workforce is engaged in the informal economy, which accounts for almost half of the country’s GDP.
Economists have long argued that greater participation of women in salaried employment is vital to sustaining India’s economic growth. According to an Axis Bank report, India’s female labor force participation is the lowest in the G20, and expanding women’s access to formal work will be critical to improving productivity and long-term growth.
Ghosh argued that weak job creation arises from the concentration of economic gains among the top 10 percent of the population. This pattern of demand limits job creation because consumption by wealthier households tends to be more import-intensive and less labor-intensive domestically, he said.
“When demand is concentrated in a relatively small group, you don’t get economies of scale,” he said, adding that businesses are less likely to expand production if the purchasing power of the broader population does not increase.
