The question before policymakers is not one of whether enough jobs exist, but whether the economy can generate employment that is sufficient in number, formal in character, and durable enough to carry a young worker into a lifetime of rising productivity and security.
When Sir Arthur Lewis set out in 1954 to explain how poor economies grow rich, he located the central drama of development not in the accumulation of capital, but in the migration of workers out of subsistence agriculture into the more remunerative occupations of industry and services, a transition he rightly anticipated would govern the prospects of every late-industrialising nation. India stands precisely at that crossing today, and the question before policymakers is not one of whether enough jobs exist, but the more demanding one of whether the economy can generate employment that is sufficient in number, formal in character, and durable enough to carry a young worker into a lifetime of rising productivity and security.
The scale of the task can be stated with some precision, for the Economic Survey 2023-24, drawing on the Periodic Labour Force Survey and demographic projections, estimated that the economy must generate nearly 78.5 lakh non-farm jobs every year through the remainder of this decade, a figure flowing from two compounding pressures, the steady rise in the workforce as participation deepens, and the labour that structural transformation must draw out of agriculture, whose share in employment, still close to 46 per cent, is expected to fall towards a quarter by 2047.
The Pradhan Mantri Viksit Bharat Rozgar Yojana, approved by the Union Cabinet in July 2025 and operational from the following month, is the most considered attempt yet to attack that deficit, deploying ₹99,446 crore through the Employees’ Provident Fund Organisation to catalyse more than 3.5 crore formal jobs in the two years to July 2027. A worker joining an EPFO-registered establishment for the first time, and earning below ₹1 lakh a month, becomes eligible for up to ₹15,000 paid in two instalments, the second conditional on a financial literacy course and held in savings, while employers who expand their payroll beyond an established baseline receive up to ₹3,000 a month for each new worker, on terms calibrated so that even small firms are drawn in rather than crowded out.
What elevates the scheme above the familiar and disappointing genre of hiring subsidies is its requirement of six months of continuous employment before the first benefit is released, since hiring a first-timer pays off only if the worker stays to become productive, and the condition converts the initial hiring into a genuine commitment, assuring the employer of tenure enough to repay the cost of training while giving the worker the months within which real skills and a credible record are built. Thus, it rewards not hiring, but the harder discipline of retention, and what it leaves behind is a portable employability track record for the worker.
Its most deliberate tilt is towards manufacturing, where the employer incentive runs for four years rather than two, a doubling that acknowledges the longer gestation of industrial capacity and weights the manufacturer’s calculus towards expanding the workforce rather than substituting labour prematurely with automation. Importantly, it is a stance that the government has recognised as essential to the country’s realisable aspiration to become a global manufacturing centre. Through the EPFO, every worker onboarded acquires a Universal Account Number and a first taste of social security few informal workers have known, and the early returns are encouraging, with some 60 lakh first-time employees enrolled since the launch, the bulk of them under thirty and over 18 lakh of them women, while nearly 1.77 lakh establishments, many of them small firms where informality has long concentrated, have generated upward of 66 lakh opportunities.
It would be imprudent, however, to mistake an encouraging beginning for an accomplished transformation, and the scheme’s safeguards, its exclusion of fraud-tainted establishments, its six-monthly electronic returns confirming that employment is sustained rather than merely declared, and its automated disbursement, reflect a welcome awareness that schemes of this kind must guard against rewarding hiring that would have occurred anyway. Its true measure will lie not in the first year’s enrolment figures but in whether the jobs outlast the incentive that created them, and whether the demand it stimulates meets a supply of employable young people, which is why its fortunes are inseparable from parallel investment in skilling.
It is worth remembering that joblessness penalises far more than income, eroding skills, self-respect, and one’s place in society, and Voltaire had said as much when he let Candide conclude that labour keeps three great evils at bay, namely boredom, vice, and want. A scheme of this kind is finally to be valued because it grasps that fuller meaning of employment, treating the formal job not as a statistic to be tallied but as the first secure rung of a working life, and the task now, as India sets its course towards a developed economy by 2047, is to hold to the patience the scheme embodies and to ensure that meaningful employment for the young, which the Prime Minister has placed at the centre of the national project, is realised not in a single season of incentives but across a generation of durable, productive, and dignified work.
The author is the Chief Economic Advisor to the Government of India
