India must grow at 12.2% to avoid jobs trap: Morgan Stanley

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 nation’s labor market is facing a dual challenge of unemployment and underemployment, Morgan Stanley economists led by Chetan Ahya wrote inanote on Monday.The youth jobless rate stands at 17.6%, the highest in the region, while a surge of workers into agriculture had pushed farm employmenttoa 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.That would not only slow its ambition of becoming the world’s next growth engine, but also intensify outward migration pressures even as H-1B visas are becoming costlier.