'Jobless Growth' Claims Understate Emerging Opportunities: EAC-PM's Gourav Vallabh

American economist Nick Perna coined the term “jobless growth” in the early 1990s to describe economies that experience growth without an increase in employment. Critics have invoked a similar argument that India’s growth in recent years has not translated into enough jobs.

To examine whether the description is justified in the Indian context, two of the country's critical economic thinkers—Gourav Vallabh and Santosh Mehrotra—offer their perspectives. Click here to read Santosh Mehrotra's view.

India’s growth is building the markets, infrastructure and productive capacity from which lasting employment emerges. Those who call this transformation “jobless growth” understate both the jobs already created and the opportunities taking shape.

The economy, as we know, expanded 7.8% in April-June 2026, with fixed investment rising 11.9%. Under Prime Minister Narendra Modi, the government’s emphasis on infrastructure, manufacturing and enterprise has strengthened the foundations for employment.

The connection between growth and jobs follows straightforward business logic. Firms hire when additional workers can help fulfil profitable orders. Initially, rising demand may be met through inventories, longer hours or spare capacity. Sustained demand eventually makes another shift, a larger workshop or a new outlet commercially worthwhile.

Employment can therefore follow investment with a lag. Strong growth, in this case, provides the confidence businesses need to make lasting commitments.

Productivity improvements also leave room for employment growth. If output increases by 8% while output per worker rises by 4%, employment increases by approximately 3.8%. This illustration demonstrates why jobs need not grow as fast as GDP for growth to generate employment.

Rising productivity also creates the capacity to pay higher wages. The objective should be to expand productive employment alongside better earnings.

Productive Employment

It is worth noting that the government’s Aatmanirbhar Bharat push is strengthening domestic capabilities and opening up international markets, helping to channel the kind of productivity growth that leads to the creation of productive employment.

Take the example of defence manufacturing, where production reached ₹1.78 lakh crore in 2025-26, compared with ₹43,746cr in 2013-14, while defence exports reached ₹38,424cr in 2025-26, with private firms contributing 24% of production. These expanding orders support opportunities in precision engineering, electronics, maintenance and the smaller enterprises supplying larger manufacturers.

Similar success in electronics, where total production increased nearly seven times between 2014-15 and 2025-26 to ₹13.11 lakh crore, while exports reached ₹4.24 lakh crore, demonstrates India’s growing participation in global manufacturing. Deepening domestic component production is the next step, which will spread the employment benefits across a wider network of suppliers, technicians and service providers.

Semiconductors are adding a further dimension. By September 2026, twelve projects across six states had secured approval, with investment commitments exceeding ₹1.64 lakh crore, while three facilities had begun commercial production.

Semicon 2.0 broadens support across the semiconductor chain, including design, equipment and materials. As projects become operational, they will create opportunities for engineers, technicians and specialised suppliers.

Space technology, at the same time, is opening promising avenues, with the Indian Space Policy 2023 expanding private participation through IN-SPACe and a ₹1,000cr venture capital fund.

Emerging private capabilities can create skilled employment across satellite manufacturing, launch services and applications in agriculture and disaster management.

Building these capabilities takes time, making policy continuity valuable.

More importantly, the evidence on employment so far supports confidence. The government reports that production-linked incentive schemes generated more than 14.15 lakh direct and indirect jobs by March 2026.

Separately, the Annual Survey of Industries recorded approximately 11 lakh additional persons employed in the covered factory sector during 2023-24.

These measures cover different populations and should not be added together. But more importantly, both show that industrial expansion is accompanied by employment.

Ticking all the Boxes

When we speak of industrial policy, advanced manufacturing need not carry the entire burden of job creation. Its expansion raises demand for logistics, construction, repair and business services. Alongside it, tourism, textiles, food processing and healthcare can absorb workers across qualification levels.

Connecting these activities will help ensure that growth in sophisticated industries also generates opportunities for people entering the labour market with fewer formal skills and limited work experience.

The government’s infrastructure programme supports precisely this process. Budget 2026-27 allocated ₹12.2 lakh crore for capital expenditure, while PM GatiShakti promotes coordinated planning.

Construction creates immediate demand for labour and materials. Completed transport links help businesses reach customers, reduce delivery costs and expand production. A road’s employment contribution continues through the factories, warehouses and services it enables long after construction ends.

Beyond industrial growth, the government is also bringing some of the economy’s niche sectors into the same growth story.

We saw the Budget announce support for stronger fisheries value chains and market connections involving startups, women’s groups and producer organisations. Better handling, processing, cold storage and transport can raise the value of the catch and support additional employment. Combining commercial development with sustainable management of marine resources will help coastal communities secure lasting gains.

The creative economy offers another new frontier. The proposal of content creator laboratories in 15,000 secondary schools and 500 colleges, supported by the Indian Institute of Creative Technologies, can create opportunities for artists, designers, writers and programmers, connecting young Indian talent with global demand and careers beyond traditional employment.

It is important to understand that the gains from all these measures can eventually create a virtuous cycle. Workers who benefit will spend their earnings on housing, food, healthcare, education and recreation, supporting employment in surrounding communities.

Rising household demand will then give businesses further reasons to invest. Sustained growth can reinforce this cycle, bringing opportunities to people with varied skills across different regions.

Economists seeking more secure jobs and stronger wage growth raise an aspiration that deserves support. Aggregate progress should encourage further improvements in the quality and accessibility of work.

Timely payments and working capital can help smaller firms convert orders into payrolls, while apprenticeships linked to vacancies can connect education with employment. Safe transport and reliable, affordable childcare can help more women take up available opportunities. These practical steps would strengthen the employment benefits of the government’s reforms.

However, to say that India’s high growth is not leading to job creation is an inaccurate description of the progress. India’s achievements provide solid grounds for confidence. High growth is already supporting employment. The focus must be on sustaining and broadening it to achieve greater prosperity.

Gourav Vallabh is a professor of finance and part-time member of the Economic Advisory Council to the Prime Minister.