Modi’s Solution for India’s Unemployment Crisis: Expanding the Government Workforce

Indian Prime Minister Narendra Modi has a solution for his country’s massive unemployment problem: more government jobs. Last week, Modi ordered the hiring of one million people for government jobs within 1.5 years. Unsurprisingly, that deadline is just months before the 2024 general elections.

Among the world’s major economies, India was hit hardest by COVID, with the economy contracting by approximately 8 percent, according to official figures. While economic activity has risen sharply amid the post-COVID recovery in India, the country continues to have a big unemployment problem — one that the private sector has been unable to meet.

As a result, with elections in mind, Modi — who was once projected as a champion of the private sector — is taking further steps to expand the size of the state to ensure a third consecutive victory for him and his party.

India’s Economy is Growing, But Employment Gains Trail

Official government sources claim India’s national unemployment rate is 4.2 percent. But the more reliable, independent Center for Monitoring Indian Economy puts India’s unemployment rate at 7.5 percent nationally and at over twenty percent in the states of Haryana and Rajasthan. Unemployment rates in India are much higher among those with college and university degrees. Young people without jobs are a recipe for political dissatisfaction and violence.

In the 2014 elections, Modi pledged to create 100 million jobs by 2022. He has certainly failed to even come close to that figure. Indian government figures are dubious, but in 2019, Modi claimed that formal sector jobs rose by nearly fifty million during his first four years as prime minister. Even if those figures were true, India’s economy shed jobs during the first phase of the COVID pandemic, in large part due to the disastrous lockdowns suddenly announced by Modi. And job growth remains anemic, coming nowhere near the peak from January 2010-11 under the tenure of Modi’s predecessor, Manmohan Singh, who was a trained economist.

Why Indian Government Jobs Are Sought After

Government jobs are highly coveted in India because of the benefits and security they offer — and because Indian graduates, on the whole, don’t have the skill sets sought by the private sector. As a result, the scale of applicants for low-level government jobs in India continues to be astounding.

Last year, over 18,000 people — including Ph.D. students — applied for 42 positions as cooks, gardeners, or peons (orderlies) in the state of Himachal Pradesh. Similarly, in the state of Haryana, there were approximately 5,000 applicants — including those with graduate degrees — for three positions as a peon earlier this year.

The Indian government is also a colossal entity. The Indian Railways alone is not only the largest employer in India, but also the eighth largest in the world. Earlier this year, applicants for railway jobs who alleged that there were irregularities with a civil service exam set a train on fire in the eastern state of Bihar — a sign of how much frustration there is with the job market.

The Welfare State Grows Under Modi

Prior to coming to office in 2014, Modi was seen by many outsiders as the Indian equivalent of a center-right politician in the West: opposed to red tape and keen to reduce the size of government. But these expectations were based not so much on reality as much as they were on Modi’s public relations talking points and mirror-imagining by Western observers.

In reality, Modi has fused Hindu nationalism with welfare statism. His push for more government jobs comes amid a rapid expansion of the Indian welfare state, especially through direct cash transfers. The Modi era has also been marked by crony capitalism, hypernationalism, and exclusionary politics. All together, politically, that’s a winning combination — as Modi’s election record shows — but it could end up becoming a fiscal nightmare, especially as pension obligations grow.

And that is one reason why the Modi government has also initiated plans to induct short-term, contract soldiers to boost the numerical strength of its armed forces. The program, known as Agnipath, has been controversial — even triggering riots in parts of the country — because it denies most contractors long-term employment or even benefits. Military aspirants from poor or lower-income families seek the long-term security that careers in the services have offered. Pensions eat up nearly a quarter of India’s defense spending, making it difficult for India to allocate spending toward catching up with China’s more advanced and leaner military.

Given India’s growing Hindu extremism, giving military training to young men only to leave them unemployed and angry four years later seems like a recipe for violence. But observers, including those on the left, suspect that may actually be part of the plan: inducting ex-Agnipath contractors into violent Hindu nationalist organizations like the Rashtriya Swayamsevak Sangh or RSS.