For more than a decade, India has lolled about in smug optimism that its rise up the development ladder is predestined because the median age of its population is low and that we need only wait for the demographic dividend to kick in. But all such optimism should evaporate upon a reading of the State of Working India 2026 study by Azim Premji University, which was released on Tuesday, March 17.
The findings of the study indicate that the window of India’s demographic opportunity will begin to close in a mere four years as the share of working-age people in the overall population starts to decline. If policymakers do not wake up, we will have effectively squandered the advantage of having a large cohort in the 15–29 age group, about one-third of the working-age population.
The main conclusion of the study is that India invested heavily in the expansion of education but gave little attention to its graduates’ transition to employment. Only a small proportion of them (7% of male grads) are able to land a stable salaried job within a year of emerging from college.
No less than 1.1 crore youth out of 6.3 crore are jobless in India. Unemployment in the age groups 15–25 and 25-29 is at 40% and 20%, respectively. These levels have been consistently high since the 1980s, implying that policy has neglected the employment end of the spectrum while promoting education. Some 67% of unemployed youth today are graduates, a level that is twice what it used to be.
Another finding that points to policymaking in deep slumber is the disproportionate employment growth in agriculture compared to industry and services, exactly at a time when youth are hoping to transition from farm to non-farm work by way of education. Of the 83 million jobs added between 2021–22 and 2023–24, 40 million were in agriculture. This is a symptom of distress. Youngsters are falling back on agriculture because non-farm jobs are hard to get. So, agriculture still employs 42–45% of India’s workforce, indicating that industry and services have not had commensurate job growth while their share in the country’s GDP has increased.
The demographic alarm sounded by the State of Working India study has special significance for the South, where educational levels are high and industrial growth has been substantial but not enough to absorb graduate numbers in good measure. The South has a higher share of regular salaried work than North India, but graduate unemployment ranges from 9-12% in Karnataka to 20–27% in Kerala. The latter is a typical case of high investment in education and low graduate employment. Tamil Nadu is located at the midpoint in the scale with graduate unemployment of 16–18% despite a strong manufacturing base.
The education-jobs mismatch is more urgent in the South because the southern states are ageing faster than the national average. Therefore, the window to leverage the demographic dividend will close sooner, and young people in the South risk growing in age without adequate income growth.
The clear inference from the study is that India has invested heavily in education in a broad sense, but not adequately in its vocational aspect. And by squandering the demographic dividend, we show a talent for turning an opportunity into a crisis.