Key Points – “Debunking the myth of job creation”
1. Context
- On July 1, 2025, the government launched the Employment Linked Incentive (ELI) Scheme with ₹10,054 crore aimed at creating formal employment in manufacturing.
- Goal: incentivise companies to generate jobs, particularly for youth, women, and under-represented groups.
2. Problems with the Scheme
- Over-focus on manufacturing:
- Assumes manufacturing will absorb India’s labour surplus, ignoring the low share of manufacturing in GDP (~17%) and automation trends.
- Majority of jobs in manufacturing are low-skill and low-wage.
- Assumes manufacturing will absorb India’s labour surplus, ignoring the low share of manufacturing in GDP (~17%) and automation trends.
- Scale mismatch:
- Even optimistic projections (~6 lakh jobs over 5 years) are negligible compared to India’s annual need for 8–10 million jobs.
- Even optimistic projections (~6 lakh jobs over 5 years) are negligible compared to India’s annual need for 8–10 million jobs.
- Exclusionary nature:
- Formal sector jobs form less than 20% of total employment; the scheme ignores the large informal sector.
- Leaves out rural, agricultural, and gig-economy workers.
- Formal sector jobs form less than 20% of total employment; the scheme ignores the large informal sector.
3. Structural Labour Market Issues
- Jobless growth: GDP growth not translating into job creation due to capital-intensive production.
- Skill gap: Many graduates are unemployed or underemployed due to mismatch between education and industry needs.
- Wage stagnation: Manufacturing wages remain low; informal sector pays even less.
4. Risks of ELI-type Approaches
- May deepen inequalities by benefiting larger firms disproportionately.
- Could ignore service sector potential, especially IT-enabled services, healthcare, and education.
- Risks overlooking rural employment generation needs.
5. Way Forward
- Diversify Job Creation Strategy
- Boost labour-intensive sectors like textiles, food processing, tourism, and construction.
- Strengthen MSMEs as they are major job providers.
- Reform Skills Ecosystem
- Align skill training with actual market needs.
- Integrate vocational education with formal education pathways.
- Promote Rural and Informal Sector Employment
- Support through public works, rural enterprise promotion, and social security.
UPSC Mains Practice Question
GS Paper 3 – Economy
“Government job creation schemes often fail to address the structural realities of India’s labour market. Critically analyse the Employment Linked Incentive Scheme in this context and suggest an alternative multi-sector job creation strategy.”
1. Context & Background
- The article discusses the Nagorno-Karabakh conflict and the increased use of armed drones in warfare, with specific focus on Bayraktar TB2 drones by Turkey.
- Highlights the strategic shift in warfare technology — low-cost, high-efficiency drones replacing or supplementing traditional weapons systems.
- Implications for Asian geopolitics and S.–China strategic competition.
2. Exercise of Modernisation
- S. is upgrading its armed forces in Asia to counter China’s growing assertiveness in the South China Sea and Indo-Pacific.
- Plans include expanding drone fleets, advanced missile systems, and upgraded surveillance capabilities.
- Strengthening alliances and partnerships with Asian states through joint military exercises and technology transfers.
3. Unmanned Warfare Trend
- Rise of drones and autonomous weapons as cost-effective force multipliers.
- Provides enhanced surveillance, precision strikes, and reduced troop casualties.
- Effective in grey-zone conflicts where direct conventional warfare may not be politically feasible.
4. China Factor
- China expanding naval presence, missile systems, and artificial island bases in the South China Sea.
- Increasing investment in drone technology for surveillance and strategic deterrence.
- S. aims to counter China’s “grey-zone” tactics by strengthening alliances with Japan, Australia, the Philippines, and Vietnam.
5. Strategic Implications for Asia
- Military Balance Shift: Drone warfare could alter naval and territorial dispute dynamics in the Indo-Pacific.
- Alliance Reinforcement:S. strengthening military cooperation with regional powers to maintain freedom of navigation.
- Technology Race: Competition between U.S. and China in AI, drones, and autonomous weaponry.
- Escalation Risk: Grey-zone tactics could spill into direct confrontation.
6. Challenges Ahead
- High cost of modern military hardware for smaller Asian nations.
- Risk of arms race in the region leading to instability.
- Legal and ethical issues surrounding autonomous warfare.
7. Conclusion
- The shift towards drone warfare and advanced autonomous systems is a game-changer in Asia’s security landscape.
Strategic competition between the U.S. and China will likely intensify, with smaller nations caught between security guarantees and sovereignty concerns.
