Skyline of Hyderabad, India

Economic situation Great potential – but a lack of jobs and training places

Until the COVID-19 pandemic broke out, India had been experiencing stable economic growth for many years. In 2020, gross domestic product (GDP) fell by 6.6 per cent as a result of the COVID-19 crisis. However, 2021 already saw significant growth again (8.7 per cent). The International Monetary Fund (IMF) is predicting economic growth of about six per cent for the following years. In 2022, India's GDP became the fifth-highest in the world, overtaking that of the UK. In some fields – for example, information technology, pharmaceutics, space exploration and biotechnology – the country is a global leader.

Great need for jobs and training places

There is still a considerable imbalance in India's economy: the size of some economic sectors measured by their share of gross domestic product is not reflected in the number of jobs in the respective sectors. Currently, only about 2.2 per cent of Indians between the ages of 15 and 59 have done any kind of formal training. More than 40 per cent of the working population is employed in the agricultural sector. However, that sector's share of GDP has shrunk over the years to a mere 17 per cent. Growth and prosperity are being generated primarily by the services sector, which accounts for 48 per cent of GDP. However, the services sector only accounts for about one third of the jobs. A very large share of the Indian workforce – 90 per cent in total – is employed in the informal sector.

What the country needs in order to defeat poverty is a great many new jobs that come with social protection – especially for unskilled and low-skilled workers. There also needs to be a far greater range of better-quality training places on offer.

Agriculture: Agro-ecology for more sustainability

Indian agriculture is largely geared towards self-sufficiency. Rural development, agriculture and food production are traditionally a key topic in politics and society. In order to feed its growing population, India pursued an approach known as the “green revolution” for many years, which was based on intensive farming and a small range of staple foods. While this made it possible to make important progress on food security, this policy also contributed significantly to soil degradation, water shortages and water pollution, high levels of pesticides in food, loss of biodiversity, and social inequality.

Because of population growth, in many regions the size of farms is constantly shrinking and more and more people no longer have land of their own. To buy fertiliser and seeds and pay for irrigation water, many small farmers have to take out loans, which is driving them into overindebtedness.

The crisis in agriculture is being exacerbated by climate change. Extreme weather is making agricultural production less and less predictable and stable. In the medium term, this is posing a threat to the availability of staple foods in large parts of India.

In light of this situation there is increasing discussion in India about establishing agroecological approaches as sustainable methods of farming. At the end of 2021, Prime Minister Modi emphasised that there should be an agricultural policy focus on natural farming. This approach is intended to contribute to food security and to a circular economy, and to improve the incomes and the economic viability of smallholder farms, facilitate soil restoration, and increase productivity, product diversity and climate resilience. India is promoting agroecological approaches via several programmes at the national and state levels.

India is also working for sustainable agriculture internationally. At the country's initiative, the UN declared 2023 the International Year of Millets. The G20 Agriculture Working Group launched the Millets And Other Ancient Grains International Research Initiative (MAHARISHI) in order to boost the cultivation of millets worldwide as a climate-resilient grain and as an alternative to wheat and rice.

As at: 06/06/2023