Dhurjati Mukherjee

Recent surveys by the Reserve Bank of India indicate that income growth has stagnated. The net response regarding current income has declined from 3.0 to 0.9, while the overall spending sentiment has also fallen from 78.4 to 74.5. At a time when unemployment and even underemployment have emerged as serious problems, affecting even the highly educated, it is a matter of concern that employment under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) witnessed a sharp decline in 2025-26. In the same year, the Central Government repealed MGNREGA and replaced it with the Viksit Bharat Guarantee for Rozgar and Ajeevika Mission (Gramin) Act.

Apart from unfavourable market conditions, the Central and state governments are also leaving a large number of vacancies unfilled in various sectors, including education. According to official figures, the unemployment rate is only 3.1 per cent, but it should not be below 4 per cent. In 2025, 56.2 per cent of workers were casual labourers, while only 23.6 per cent had regular salaried or wage employment.

The share of regular wage employment increased from 21.7 per cent in 2023-24 to 23.6 per cent in 2025, but over the past two decades, it has risen by only a few percentage points. Compared with neighbouring countries, 46 out of every 100 workers in Vietnam receive wages, compared with 55 in China and 77 in South Korea, whereas the corresponding figure in India is only around 26.

According to a national report released by private research organisation Labtech India, titled “Decline in Employment and Income under MGNREGA in FY 2025-26,” the number of person-days generated under MGNREGA fell from 412 crore in 2023-24 to 268 crore in 2024-25 and 211 crore in 2025-26.

The average number of person-days per household also declined sharply, from 50.18 in 2024-25 to 42.95 in 2025-26. Significantly, only 0.37 crore households were able to complete the stipulated 100 days of employment in 2024-25, and this figure fell to 0.22 crore in 2025-26. It would therefore be fair to say that the last financial year was one of the most difficult years in terms of employment generation, particularly at a time when unemployment had already reached alarming levels.

Under the new Viksit Bharat Guarantee and Ajeevika Mission (Gramin), which came into effect in July, reports indicate that the allocation of person-days has been reduced by 49.04 per cent. It would not be reasonable to attribute such a sharp, nearly 50 per cent decline in employment generation merely to the “agricultural pause period” provided for under the new law.

Despite an increase in working days during the financial year, the number of employment days available to the rural poor has declined considerably. Much remains to be done to ensure the successful implementation of the scheme, particularly because states will have to bear 40 per cent of the financial burden, while the budgetary allocation of Rs 95,000 crore is quite inadequate if the targets are to be achieved.

Meanwhile, the State of the Global Workplace Report 2026, which surveyed the well-being of 1,41,444 employees across 160 countries, found that employee engagement declined for the second consecutive year. The decline was most pronounced in South Asia, with India making a significant contribution to the trend. A comparison with data from the past 15 years highlights the seriousness of the decline.

Although the proportion of actively disengaged employees in India has fallen, the “not engaged” category, described as “quiet quitters”, accounts for 59.02 per cent of the sample of 3,095 respondents. “Quiet quitting” refers to a situation in which employees do not actually resign but perform only the minimum work required and become emotionally detached from their roles. Moreover, engagement levels among workplace managers fell from 30 per cent during 2022-24 to 20 per cent during 2023-25.

This suggests that Indian workplaces lack effective leadership capable of keeping team morale high. Long working hours and job insecurity also undermine motivation. South Asia has the lowest proportion of thriving and satisfied employees. At the same time, over the past 15 years, feelings of anger among employees

in India have increased by 6 per cent and sadness by 15 per cent. The consequences include declining productivity, reduced innovation and weakening organisational structures. India’s unemployment rate has remained around 5 per cent, but even among those who are employed, indifference towards work is increasing. Clearly, more employment opportunities need to be created and governments must fill all vacant positions. Meaningful work, fair wages and opportunities for growth are essential.

The economy is passing through a critical phase amid rapidly rising oil prices and shortages of fertilisers. Against this backdrop, it is difficult to expect any significant increase in employment generation during the current financial year. Moreover, around eight million graduates are entering the job market every year, while the demand for additional employment remains limited. Over the past decade, inflation-adjusted real wages have declined by around 5 per cent annually. Despite government efforts, employment generation remains a major challenge because of inadequate capital resources and insufficient levels of state investment and private capital.

In fact, employment elasticity in India stood at 0.41 per cent in the 1990s but has fallen to 0.01 per cent in 2026. This means that economic growth is producing virtually no meaningful expansion in formal employment. The coming months, and even the current financial year, appear quite disappointing in terms of employment generation in both the formal and informal sectors.

On the other hand, entrepreneurship and start-ups are creating some employment through various projects. However, they need greater encouragement through government support so that skilled manpower can be effectively utilised. Experts argue that innovation should be encouraged and higher education institutions should work with small and micro enterprises to develop products that can gain global acceptance.

The government should prioritise filling vacant positions for teachers and professors, particularly in educational institutions in rural and semi-urban areas. It appears that nearly one million school-teacher positions are vacant, adversely affecting rural children. One reason could be the lack of resources available to state governments. Some alternatives could be considered, such as raising funds for this purpose by imposing a small tax on millionaires and billionaires.

In addition, corporate houses could be asked to bear the salaries of temporary teachers in two schools – a total of eight teachers, each receiving Rs 20,000 per month. This amount could be allowed as a deduction under the income-tax provisions. If 15 business houses were identified for this purpose, salaries for 60 teachers could be ensured, while also creating employment opportunities. At the same time, children would not have to suffer from the shortage of teachers. Similarly, compounders and paramedical staff could be appointed in at least 50 rural health centres.

Tax concessions granted to the affluent sections and the resulting fiscal constraints – intended to attract the corporate sector for business and investment – have not proved particularly beneficial. The expected investment in the manufacturing sector has not materialised. Instead, business groups have invested in relatively safer sectors such as education and healthcare, as well as in services. Private healthcare centres and educational institutions are earning substantial profits and primarily catering to the needs of the upper sections of society.

Given the current geopolitical circumstances, attention must be paid to the feasibility of manufacturing domestically those products that are currently imported. This would not only save foreign exchange but also create employment opportunities. Defence manufacturing, fertiliser production, coal gasification, machine-tool manufacturing, electronics and tourism should be among the priority sectors. These sectors have the potential to generate employment and utilise skilled manpower. This could also help contain growing social unrest and protests among the youth.

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