India’s unemployment rate to decline 97 bps by 2028

India's unemployment rate is likely to decline by as much as 97 basis points by 2028 as the country's economy hits the USD 5 trillion mark, fuelling a rise in employment, a new report said on Tuesday.

Unemployment rate -- the percentage of people in the labour force who are without jobs -- is projected to fall from 4.47 per cent in 2024 to 3.68 per cent in 2028, the India Employment Outlook 2030 report by thinktank Observer Research Foundation (ORF) said.

"India's job market is experiencing a transformation as the country has become the world's fastest growing large economy in the aftermath of the Covid-19 pandemic," the report said.

The country's young population, whose median age is 28.4 years, holds a key to fuelling economic expansion.

"With a GDP growth rate of 7.8 per cent, India could potentially achieve its target of becoming a USD 5-trillion economy by 202627, with such growth being underpinned by strong private consumption and public investment," it said.

India's gross domestic product (GDP) size is estimated at just under USD 4 trillion in 2024.

An ORF press statement said the report identifies sectors that the country's 600-million-plus population of people aged 18-35 years regard as aspirational, as these sectors could act as engines of growth in the years ahead.

"The report forecasts that as India approaches its USD 5 trillion goal, overall employment could rise 22 per cent, while unemployment could decline by 97 basis points by 2028," the statement said.

The service sector in particular is set to witness significant job creation with each unit rise in services output expected to contribute to a substantial 0.12 per cent increase in employment.

The report singles out ten especially high-opportunity sub-sectors in the services space.

These include digital services, financial services, and services related to health, hospitality, consumer retail, e-commerce, and renewable energy. Other areas poised for rapid growth are global capability centres, and MSME and startup ecosystems.

The burgeoning service sector also offers encouraging avenues for women's employment. Hence, investing in women's skilling, financial inclusion, and entrepreneurship needs to be prioritised further, argues the report.