“India's Development Policy Challenge,” co-authored by Devashish Mitra, professor of economics and Gerald B. and Daphna Cramer Professor of Global Affairs, was published by the 1991 Project, an initiative of the Mercatus Center at George Mason University. Following is an excerpt:

India’s biggest challenge is rooted, ironically, in its ongoing demographic dynamics. The country is poised to add around 150 million people over the next two decades to its already massive labor force. Finding productive employment for this army of young Indians is the immediate task facing the country’s labor market. Unfortunately, the labor market is coming up short. According to a recent report from the International Labour Organization,[2] the unemployment rate is 18% for Indians with at least a secondary education, and even greater—29%—for college graduates. Even more distressingly, the Centre for Monitoring Indian Economy estimates the unemployment rate of Indians 20–24 years old to be 44%.

These statistics suggest that the key task that awaits policymakers over the next decade is, at the very least, to prioritize transitioning the huge and growing labor force from rural and agrarian work to more urban and nonagrarian work. This transition requires a multidimensional effort that encompasses education policy, labor laws, policies governing land acquisition and commercial rezoning, trade policies, electricity tariff rationalization, urban development, infrastructure development, competition policy, entrepreneurial incubation, and corporate taxation.[3]

Our thesis is that absorbing this army of entrants into the labor market will require the growth of manufacturing firms that are much more labor intensive than the typical Indian firm today. Success will require coordinated policy action on all the dimensions listed above.

Read the full article at the link above.