Santosh Mehrotra discusses his new book India Out of Work: Rethinking India’s Growth Story, exploring the relationship between economic growth, employment and demographic change in India.
India Out of Work: Santosh Mehrotra on India’s Growth, Employment and Demographic Change
Since 2017, when we saw the first Annual Survey of the Labour Force of India (PLFS initiated the annual series of labour force surveys in India, as prior to that India had 5-yearly surveys) results showed that unemployment, especially of youth (15-29 years) had risen to a 45 year high, we were stunned, as was the country.
We knew immediately (survey data surfaced only in May 2019) that policy-induced shocks to the economy had caused major disruptions to what had been a very fast growing economy (almost 8% per year over 2003-15), that had been generating 7.5 million new farm jobs per year. These shocks were delivered by the central government itself: the first was in the form of demonetization of 86% of legal tender currency (i.e. eliminating largest denomination notes of Rs 500 and Rs 1000), damaged the small and tiny businesses that predominate in the unorganized segment of India’s services and manufacturing, as well as of farmers (that accounted for 42% of the total workforce). These are informal businesses that rely on cash for most transactions.
Their liquidity was wiped out overnight. A second shock that was delivered by the government was again to the same micro, small & medium (MSMEs) enterprises, coming in mid-2017, when a new nationwide Goods and Services Tax was imposed on all products/services, which subsumed 17 existing state governments and central indirect taxes. It was conceptually always intended to benefit the economy by creating a common national market as tax rates on goods and services were made uniform across a vast country with 29 states (that had varying indirect tax rates hitherto). However, it was poorly designed, and even implemented too hurriedly — without pilot testing the software which was the backbone of the tax collection system. Coming soon after the demonetization, the GST had a serious damaging effect on MSMEs, which are the biggest creators of non–farm jobs in INdia. Finally, the poor management of the Covid health crisis in early 2020 and over the next two years also compounded India’s economic problems, worsening an already rapidly deteriorating jobs crisis. These together led us to believe that we must analyse this situation, and make the country, its policy makers, and its youth aware of the Polycrisis in the economy, employment and education system.
— One of the patterns discussed in the book is the growing gap between educational attainment and labour-market opportunities. What does this gap tell us about how India’s education system and economy have developed in relation to each other?
India inherited a 18% literacy rate in 1947 from the British colonizer, who had plundered the country and de-industrialized it. This colonial legacy unfortunately was not going to self-correct: it needed massive public investment early in the development process. However, India’s education system had neglected school education until 1991, and till then privileged higher education in terms of public education spending. This we argue is a reflection of India’s highly socially stratified Hindu society along caste lines: we call this India’s Brahmanical educational system, which evolved in a top-down manner (unlike China’s bottom-up one).
Finally, when schooling was universalized in the last decade of the 20th century and the first decade of the 21st, the massification was rapid, with corresponding lack of quality. This worked upwards, as massification ensued in Higher Education as well between 2006 and 2017. Tragically, the latter was largely led by an unscrupulous private sector, which grew unregulated. The result is again, quantitative expansion of enrolment at the expense of quality. The poor quality of both school and tertiary education was bound to translate into problems in the transition to the world of work. It had two consequences, of a complementary and mutually reinforcing nature: the growth of informal employment (as too many of school drop outs had too little or too poor a quality of schooling) and the lack of employability of the majority of tertiary graduates. These problems were compounded by the following fact; the Brahmanical, caste dominance by policy-makers ensured that vocational education/training received little attention, while general academic education thrived. This again, was the opposite of how policy towards education evolved in East Asia.
— The book describes a reversal of the structural transformation usually associated with economic development, whereby workers are moving back towards agriculture. How should we interpret this reversal in India’s long-term development trajectory? Does it indicate a temporary disruption or a fundamental shift in the country's growth model?
It can be a temporary disruption, but only if there is a dramatic change in both education policies as well as in growth strategy. There was a gradual pace of structural transformation in place prior to 2015; it needed an Industrial Policy (IP) to enable India’s economy to recover manufacturing strength in both output and employment terms. However, the current government does not understand what a horizontal and explicit IP means for India’s current stage of development. Nor does it recognize the need for radical changes to its education system. Both radical reforms are possible, but that requires an urgent change in government at the centre. That is because the current government does not even recognize the need for either of the two types of radical reforms.
— The book also draws attention to groups that remain particularly disadvantaged in India’s labour market, including women and those in low-productivity informal employment. How do these inequalities shape the broader development trajectory rather than simply reflecting it?
The women’s exclusion is caused mostly by the slow non-farm job creation (for reasons partly explained above). The slowness of non-farm job creation is caused by the policy shocks. Women are the worst sufferers of these policy failures.
On the other hand, informality is caused by a combination of labour supply and of labour demand factors. Labour supply is coming from the education system, whose quality was discussed above. Such poorly educated or trained workers would not be ready for employment in formal high productivity work. Meanwhile, low demand for workers from the formal economy is a reflection of employers/capitalists preferring to employ capital-intensive techniques; and it is also a reflection of the lack of good policies to support labour intensive manufacturing. The highly educated and highly skilled are meanwhile, able to secure formal employment in the capital-intensive manufacturing as well as high-skilled services (health, education, financial intermediation, airlines, and above all software services for both the domestic and export markets).
What emerges is a highly unequal labour market, reflecting the extremely unequal nature of the education system, and the unequal distribution of income and wealth that is manifested in the low level of aggregate demand for goods and services (other than for food and basic necessities).
— Since the book was published, new labour market data and public debates have continued to emerge. Has anything you have seen since the book’s publication made you reconsider, refine or reinforce any of its arguments?
No, the book was only published on 19 May. We had finished updating it with the latest 2025 data in early April 2026. Nothing has changed for the better.
If anything, the biggest manifestation of the Polycrisis was that in early June 2026 through July, the young protested about joblessness and the educational failures. When the police cracked down heavily upon the youth in central New Delhi (near Parliament), the youth of the entire country erupted in protest. This kind of explosive and sudden eruption across the length and breadth of the country was inevitable, and had been likely for some years - we had been predicting it in our public statements for 7 years before the publication of the book. There are hints in the book of impending protests by the young. All our arguments have been reinforced by these developments.
* The world of work is changing — but are education systems changing with it? In the first episode of the Around Education podcast, produced by the HSE Institute of Education and titled 'Skills, Status, and the Future of Work: The Changing Value of Education', Santosh Mehrotra and Vera Maltseva discuss how shifting labour markets are redefining the value of education and the career pathways and skills that will be required in the future.
Their liquidity was wiped out overnight. A second shock that was delivered by the government was again to the same micro, small & medium (MSMEs) enterprises, coming in mid-2017, when a new nationwide Goods and Services Tax was imposed on all products/services, which subsumed 17 existing state governments and central indirect taxes. It was conceptually always intended to benefit the economy by creating a common national market as tax rates on goods and services were made uniform across a vast country with 29 states (that had varying indirect tax rates hitherto). However, it was poorly designed, and even implemented too hurriedly — without pilot testing the software which was the backbone of the tax collection system. Coming soon after the demonetization, the GST had a serious damaging effect on MSMEs, which are the biggest creators of non–farm jobs in INdia. Finally, the poor management of the Covid health crisis in early 2020 and over the next two years also compounded India’s economic problems, worsening an already rapidly deteriorating jobs crisis. These together led us to believe that we must analyse this situation, and make the country, its policy makers, and its youth aware of the Polycrisis in the economy, employment and education system.
— One of the patterns discussed in the book is the growing gap between educational attainment and labour-market opportunities. What does this gap tell us about how India’s education system and economy have developed in relation to each other?
India inherited a 18% literacy rate in 1947 from the British colonizer, who had plundered the country and de-industrialized it. This colonial legacy unfortunately was not going to self-correct: it needed massive public investment early in the development process. However, India’s education system had neglected school education until 1991, and till then privileged higher education in terms of public education spending. This we argue is a reflection of India’s highly socially stratified Hindu society along caste lines: we call this India’s Brahmanical educational system, which evolved in a top-down manner (unlike China’s bottom-up one).
Finally, when schooling was universalized in the last decade of the 20th century and the first decade of the 21st, the massification was rapid, with corresponding lack of quality. This worked upwards, as massification ensued in Higher Education as well between 2006 and 2017. Tragically, the latter was largely led by an unscrupulous private sector, which grew unregulated. The result is again, quantitative expansion of enrolment at the expense of quality. The poor quality of both school and tertiary education was bound to translate into problems in the transition to the world of work. It had two consequences, of a complementary and mutually reinforcing nature: the growth of informal employment (as too many of school drop outs had too little or too poor a quality of schooling) and the lack of employability of the majority of tertiary graduates. These problems were compounded by the following fact; the Brahmanical, caste dominance by policy-makers ensured that vocational education/training received little attention, while general academic education thrived. This again, was the opposite of how policy towards education evolved in East Asia.
— The book describes a reversal of the structural transformation usually associated with economic development, whereby workers are moving back towards agriculture. How should we interpret this reversal in India’s long-term development trajectory? Does it indicate a temporary disruption or a fundamental shift in the country's growth model?
It can be a temporary disruption, but only if there is a dramatic change in both education policies as well as in growth strategy. There was a gradual pace of structural transformation in place prior to 2015; it needed an Industrial Policy (IP) to enable India’s economy to recover manufacturing strength in both output and employment terms. However, the current government does not understand what a horizontal and explicit IP means for India’s current stage of development. Nor does it recognize the need for radical changes to its education system. Both radical reforms are possible, but that requires an urgent change in government at the centre. That is because the current government does not even recognize the need for either of the two types of radical reforms.
— The book also draws attention to groups that remain particularly disadvantaged in India’s labour market, including women and those in low-productivity informal employment. How do these inequalities shape the broader development trajectory rather than simply reflecting it?
The women’s exclusion is caused mostly by the slow non-farm job creation (for reasons partly explained above). The slowness of non-farm job creation is caused by the policy shocks. Women are the worst sufferers of these policy failures.
On the other hand, informality is caused by a combination of labour supply and of labour demand factors. Labour supply is coming from the education system, whose quality was discussed above. Such poorly educated or trained workers would not be ready for employment in formal high productivity work. Meanwhile, low demand for workers from the formal economy is a reflection of employers/capitalists preferring to employ capital-intensive techniques; and it is also a reflection of the lack of good policies to support labour intensive manufacturing. The highly educated and highly skilled are meanwhile, able to secure formal employment in the capital-intensive manufacturing as well as high-skilled services (health, education, financial intermediation, airlines, and above all software services for both the domestic and export markets).
What emerges is a highly unequal labour market, reflecting the extremely unequal nature of the education system, and the unequal distribution of income and wealth that is manifested in the low level of aggregate demand for goods and services (other than for food and basic necessities).
— Since the book was published, new labour market data and public debates have continued to emerge. Has anything you have seen since the book’s publication made you reconsider, refine or reinforce any of its arguments?
No, the book was only published on 19 May. We had finished updating it with the latest 2025 data in early April 2026. Nothing has changed for the better.
If anything, the biggest manifestation of the Polycrisis was that in early June 2026 through July, the young protested about joblessness and the educational failures. When the police cracked down heavily upon the youth in central New Delhi (near Parliament), the youth of the entire country erupted in protest. This kind of explosive and sudden eruption across the length and breadth of the country was inevitable, and had been likely for some years - we had been predicting it in our public statements for 7 years before the publication of the book. There are hints in the book of impending protests by the young. All our arguments have been reinforced by these developments.
* The world of work is changing — but are education systems changing with it? In the first episode of the Around Education podcast, produced by the HSE Institute of Education and titled 'Skills, Status, and the Future of Work: The Changing Value of Education', Santosh Mehrotra and Vera Maltseva discuss how shifting labour markets are redefining the value of education and the career pathways and skills that will be required in the future.
How can a fast-growing economy provide enough employment opportunities for its growing working-age population? This question lies at the heart of India Out of Work: Rethinking India’s Growth Story, a new book by Jajati Keshari Parida and Santosh Mehrotra. Jajati Parida is a Professor of Economics at the University of Hyderabad and Santosh Mehrotra was a Professor of Economics at the Centre for Labour Studies at Jawaharlal Nehru University, is currently Visiting Lead Fellow, Institute of Education, HSE, as well as being a member of the CERE Observatory Expert Board.
The book examines India’s economic development through the lens of employment. It draws attention to issues such as weak non-farm job creation, educated youth unemployment, women’s participation in the workforce, inequality, and the quality of employment. The authors argue that India has a limited window to benefit from its demographic dividend.
In his review of the book, political economist and author Dr Prabhakar Parakala calls it “a must-read for anyone who cares about the trajectory of India’s economic development,” describing it as an important contribution to the debate on the challenges facing India and its policymakers.
We spoke to Santosh Mehrotra about how the book came together, the evidence behind its arguments and what India’s employment and development trajectory reveals about the relationship between education, economic transformation and the labour market.
— The book provides a comprehensive analysis of India’s growth and employment trajectory. What prompted you and Jajati Keshari Parida to write India Out of Work? How did the idea for the book come about, and what questions did you set out to answer when you started researching?
The book examines India’s economic development through the lens of employment. It draws attention to issues such as weak non-farm job creation, educated youth unemployment, women’s participation in the workforce, inequality, and the quality of employment. The authors argue that India has a limited window to benefit from its demographic dividend.
In his review of the book, political economist and author Dr Prabhakar Parakala calls it “a must-read for anyone who cares about the trajectory of India’s economic development,” describing it as an important contribution to the debate on the challenges facing India and its policymakers.
We spoke to Santosh Mehrotra about how the book came together, the evidence behind its arguments and what India’s employment and development trajectory reveals about the relationship between education, economic transformation and the labour market.
— The book provides a comprehensive analysis of India’s growth and employment trajectory. What prompted you and Jajati Keshari Parida to write India Out of Work? How did the idea for the book come about, and what questions did you set out to answer when you started researching?
14 September 2026
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