Vol: 15, Issue: 4 2025

Page: 56-67

The Relationship between Economic Growth and Unemployment in India

Yuktha Puranik

Received Date: 2025-07-19

Accepted Date: 2025-08-20

Published Date: 2025-10-28

http://doi.org/10.37648/ijtbm.v15i04.004

Economic growth and employment are two key indicators of a nation’s macroeconomic success. Traditional economic theory, supported by Okun’s Law, suggests that as GDP increases, unemployment should decrease due to greater business activity and labour demand. However, despite India’s consistent high growth over the past decade, youth unemployment remains significantly elevated, raising concerns about the inclusivity of this growth. This paper explores the relationship between economic growth and employment in India, focusing on the contrasting experiences of youth and experienced workers. Using data from the Periodic Labour Force Survey (PLFS), World Development Indicators (WDI), and Reserve Bank of India (RBI) statistics, the study analyses employment trends across sectors, genders, and regions from 2020 to 2023. Results reveal that while GDP growth has reduced overall unemployment, the benefits have been uneven, with young people—particularly women and rural youth—facing higher joblessness and underemployment. To provide an international benchmark, the paper compares India’s trends with those of Germany, where strong institutional frameworks, vocational training systems, and youth employment policies have maintained stable youth employment despite slower growth. The study concludes by proposing policy interventions that India could adopt, including a Youth Guarantee scheme and a dual vocational education model, to ensure that future growth is both inclusive and sustainable

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