Is India Harnessing Its Demographic Dividend?

India’s youth population represents a demographic dividend, but whether it translates into economic gains depends largely on employment generation. 

India has 367 million youth, but their share will begin to decline after 2030. Every year, five million graduates enter the market, but only 2.8 million jobs are created.

Degrees are increasing, but not jobs.

Unemployment Among Youth

According to the State of Working India 2026, a report released by Azim Premji University, nearly 40% of graduates up to the age of 25 are unemployed. Only 7% of the youth secure stable employment within one year of completing their education, indicating that a degree does not guarantee a job. The report also points out that professional courses, such as engineering and medicine, remain expensive for students from economically weaker families.

The level of education among those aged between 15 and 19 has improved significantly, but employment growth has not kept pace. India has around 63 million graduates, out of which 11 million are unemployed. 

Among graduates between 19 and 25, the unemployment rate stands at 39.33%, while for those above 25, it is around 20%

— Manish Doshi, Convener, Gujarat Congress Media Cell

India currently has 11 million unemployed graduates. In Gujarat alone, over 200,000 government positions remain vacant for a long time.

However, Gujarat Labour and Employment Minister Kunvarji Bavaliya, citing the Periodic Labour Force Survey (PLFS), stated that the state’s unemployment rate is 1.1%, significantly lower than the national average of 3.2%. A senior official added that Gujarat’s relatively low unemployment is driven by strong industrial activity, trade, and small businesses.

Despite the population rising to 73.5 million; staffing levels fixed in 1995 have not been revised, Doshi further points out. "Between 2004 and 2023, nearly five million graduates were added annually, while job creation stood at only 2.8 million," he said.

Gender Wage Gap

The silver lining is that the gender wage gap has narrowed. But it also brings to the fore the need to create more salaried employment opportunities to reduce the migration of skilled youth abroad. There is a clear need to bridge the gap between education and skill development. Platforms such as the National Career Service should be strengthened, and social security for youth must be expanded.

A striking trend that has been observed is that the younger generation is moving away from traditional employment models. This indicates that while India has youth and education, the system is unable to provide adequate employment opportunities.

"India has the world’s largest youth population, but this demographic advantage will translate into economic growth only if young people have access to quality employment," says researcher Rosa Abraham. 

Measures To Boost Employment

Though the Centre and the state governments have taken concerted measures to boost employment and improve skill development, the reality on the ground reveals a significant gap between skill acquisition and productive employment, with a high prevalence of informal, low-productivity jobs. 

Several policy measures have been implemented to boost youth employment. Key initiatives such as the PM Kaushal Vikas Yojana (PMKVY) for training, the Prime Minister’s Employment Generation Programme (PMEGP) for loans, and the Pradhan Mantri Viksit Bharat Rojgar Yojana to incentivise hiring have provided an integrated structure, bridging capacity gaps. Yet it is a long way forward before such initiatives translate into sustained, long-term outcomes.