Rural aspirations: Economic opportunities need to be spread across India

A large proportion of youth aged 18-25 years who have never been employed do not aspire to join the workforce, possibly due to the challenging state of rural economy and limited non-farm opportunities

With a youth population of 378 million, India is one of the youngest nations in the world at present. Two-thirds of this youthful demographic reside in rural areas, which account for 70 per cent of the nation’s total population, but contribute only about 46 per cent to the country’s gross domestic product. A significant 80 per cent of the rural workforce is engaged in agriculture and allied activities. Given the demographic and economic context, it is imperative to thoroughly understand the aspirations, challenges, and status of this segment. In this context, a recent report “State of Rural Youth Employment 2024”, launched by Chief Economic Advisor V Anantha Nageswaran, could be useful. Prepared by the Development Intelligence Unit with other organisations, the report is based on a survey of 5,169 young people across 21 states.

The report indicates that a substantial majority — 75-80 per cent of the current workforce — are seeking a change in their employment situation, with many expressing a desire for self-employment. However, they encounter obstacles such as limited access to financial resources, lack of moral support from immediate family members, and insufficient technical knowhow. Young women primarily prefer salaried government jobs, but many end up managing small businesses. Further, a concerning insight is that a significant proportion of the youth aged 18-25 years (around one-fourth) who have never been employed express no aspiration to join the workforce. One possible explanation could be the challenging state of the rural economy, particularly the limited opportunities in non-farm sectors, which may have discouraged young people from seeking employment.
 

Additionally, as Dr Nageswaran highlighted during the report launch, extensive expenditure on social schemes might also play a role in dissuading youth from actively seeking jobs. This observation aligns with recent findings in the United States, where a similar pattern has been noted, underscoring the need for policymakers to closely examine the issue to understand its implications and address the underlying causes effectively. Another significant finding is that over 60 per cent of respondents preferred to find work in or close to their village, even when income was 20-30 per cent lower. This preference is rational, considering the additional costs associated with working in urban centres, such as higher living expenses and commuting costs.
 

Therefore, to resolve this issue, the report recommends bringing the economy to the village people by planning labour absorption at the district level. This approach has been tested in two rural districts— Ramgarh in Jharkhand and Barwani in Madhya Pradesh — with early impact already benefitting over 50,000 youth across these districts. This also shows why economic opportunities need to be spread across the country. A few urban centres driving economic activity can have limitations. Besides, given the constraints of civic bodies in India, the carrying capacity of large cities has not improved significantly over the years. Labour absorption is crucial, requiring the development of opportunities in both entrepreneurship and employment across farm and non-farm sectors. A renewed focus on investing in infrastructure, skill development and financial services could significantly bolster nano and micro enterprises. Such investments would support industries like textiles, footwear and food processing, along with other semi-skilled trades, thus boosting the rural economy.