'India should grow twice as fast to avoid jobs trap'

India’s economy needs to expand at an extraordinary 12.2% pace each year to solve its underemployment crisis, Morgan Stanley economists warned, underscoring the risk that millions of young Indians may remain locked out of productive work, fueling social strains at home.

- Bloomberg

The South Asian nation’s labor market is facing a dual challenge of unemployment and underemployment, Morgan Stanley economists led by Chetan Ahya wrote in a note on Monday.

The youth jobless rate stands at 17.6%, which is the highest in the region, while a surge of workers into agriculture had pushed farm employment to a 17-year high, according to their note.

Without stronger industrial and export growth, accelerated infrastructure roll out, and sweeping reforms to upgrade skills and improve the business climate, India risks falling into a jobs trap, the Wall Street firm warned.