India’s Top-Heavy Boom and the Lesson for Bangladesh
Observations from the Capital
India s top heavy boom – Over 14 months in the role of Minister (Press) at the Bangladesh High Commission in New Delhi, I examined India’s economic landscape through daily commutes on metro rails, buses, and provincial roads. Conversations with diplomats and Indian media professionals offered additional insight. My travels took me to Uttar Pradesh, Uttarakhand, Rajasthan, West Bengal, Andhra Pradesh, and Himachal Pradesh, where I witnessed firsthand the interplay between citizens and the economy.
Structural Imbalance
The overall impression was clear: India holds immense potential, yet its growth is marked by deep structural imbalances. It boasts scale but lacks widespread distribution of wealth. While the nation pursues grand ambitions, its economic framework struggles to support broad-based prosperity. This contrast is evident in the disparity between thriving urban sectors and stagnation in rural areas.
The Growth Model’s Flaw
India’s economic model has become increasingly concentrated. Elite wealth, urban hubs of modern prosperity, and globally competitive services dominate the scene. However, middle-income employment remains elusive. The country accelerated its shift to a service-driven economy before completing industrialization, bypassing the historical phase of labor-intensive manufacturing that once fueled mass prosperity.
Job Market Challenges
Annual additions to the workforce—approximately 10-12 million young, educated Indians—highlight a growing mismatch. This influx resembles adding a country the size of Belgium to the labor market yearly. Software parks, financial offices, and high-end services alone cannot absorb such numbers. Factories, warehouses, and medium-sized enterprises are essential, yet they remain underdeveloped.
Official labor statistics and private estimates vary, but the pattern is consistent. Youth unemployment remains high, particularly in cities and among graduates. In some areas, female youth unemployment surpasses these rates. Disguised unemployment further complicates the picture, as multiple family members often share tasks that could be fulfilled by a single worker. This results in stagnant economic progress despite employment counts.
Comparisons and Lessons
Recruitment frenzies for low-level public jobs illustrate this challenge. In 2022, Indian Railways announced 35,000 vacancies, drawing over 12 million applicants—about 357 candidates per position. When exam rules changed, protests erupted in Bihar and other regions. Similar trends emerged in 2024, with 93,000 applicants vying for just 62 peon roles in Uttar Pradesh. These are clerical positions requiring minimal skills, yet they attract graduates and engineers, underscoring the gap between education and job opportunities.
Globally, India’s economic rise is often celebrated. As the fourth-largest economy, with output exceeding $4 trillion, it has achieved growth rates between 6% and 8%. Its stock market has surged, and technological feats like lunar landings have captured international admiration. Western capitals increasingly see India as a democratic alternative to China. Yet, these achievements mask a deeper issue: rising output without sufficient employment creation.
Historically, nations like Britain, Germany, Japan, South Korea, Taiwan, and China followed a path of industrialization first, enabling rural labor to transition into factories and drive productivity. Vietnam is now mirroring this trend, and Bangladesh has done so through garment exports. India was expected to replicate this model but has yet to fully realize it. The result is a growing realization that its current trajectory may not sustain long-term inclusive growth.
