India’s rapid economic growth, led by its services sector, faces challenges from uneven job creation and a persistent rural-urban divide

MUMBAI: India’s economy is booming, but its rapid ascent is clouded by uneven growth that leaves millions behind.

The nation’s services sector has evolved from low-cost back offices to high-value centres for IT, data analytics, and innovation.

Amazon’s largest global office is now in southern India, and JPMorgan has roughly 20% of its workforce in Indian cities.

The government says India is home to about one-fifth of the world’s chip design engineers, aided by hiring from firms like Qualcomm and MediaTek.

This transformation has cemented India’s status as the fastest-growing major economy since 2021.

Consultant Alouk Kumar says demand from European firms to set up offshore centres has been “crazy”.

“The way it is increasing, the next 10 years will belong to India,” he said.

Market reforms in the 1990s unlocked a USD 283 billion software-services industry, while a massive infrastructure drive since 2014 has underpinned swift growth.

Economist Dhiraj Nim of ANZ Research said India’s feat “cannot be trivialised”.

He noted many countries “failed to capitalise” on similar opportunities or “squandered them”.

This growth has helped transform the country, with poverty falling significantly.

The World Bank estimates the share of Indians living on USD 4.20 or less per day plunged from 57.7% in 2011–12 to 23.9% in 2022–23.

A middle class estimated at over 300 million has also emerged.

However, experts caution the gains from rapid expansion remain wildly uneven across society.

“There are still a lot of youngsters who are left behind by the progress of our economy,” said Amit Saxena of Ambe International.

His firm sends thousands of blue-collar workers overseas each year in search of better-paid work.

Nearly half of India’s population still relies on agriculture for subsistence.

This keeps GDP per capita far below other major economies, being 12 times smaller than Japan’s.

Bhaskar Chakravorti, Dean of Global Business at The Fletcher School, said growth is “largely fuelled by demand from the top 100 million people”.

He added a “significant portion” of the workforce remains in low-productivity, informal sectors.

Most economists say India needs sustained 8% annual growth for two decades to become a high‑income country.

The immediate priority is creating quality jobs for the millions entering the labour force each year.

Analysts at Morgan Stanley believe India requires average GDP growth of 12.2% to truly tackle underemployment.

Shifting workers from farms to factories is central to that goal.

While India has attracted firms like Apple to assemble iPhones, it is far from a manufacturing powerhouse.

In rural Maharashtra, the gulf between national headlines and reality feels stark.

Nitin Gaikwad, 32, supplements his meagre farm income by laying roads under a government jobs scheme.

“I don’t see any progress anywhere. If they are saying this, it is only in the cities,” he said.

“It is an illusion that the country is progressing. The villages have remained untouched.”

 The Sun Malaysia