In late July, Gen‑Z protests across India’s capitals erupted after exam paper leaks sparked a wave of anger. The agitation forced Education Minister Dharmendra Pradhan to resign last month.
Prime Minister Narendra Modi quickly announced fast‑track courts to prosecute those behind the leaks, and tapped tech billionaire Nandan Nilekani to lead a reform of the nation’s examination system. But the protests reveal a deeper, long‑term strain on the country’s political landscape: a disjointed labour market and an education system that fails to supply graduates with employable skills.
Veteran economist Santosh Mehrotra warned that over the last decade India’s non‑farm jobs haven’t grown, real wages have stalled and graduates face a “structurally weak” economy that can’t provide quality employment. He added that the state’s massive spending on infrastructure is a band‑aid to mask persistent unemployment among the youth.
India’s large youth population—over 360 million aged 15‑29—has seen rising enrolment, yet the transition from education to employment remains a major challenge. The State of Working India 2026 report shows graduate unemployment hovering at 35‑40% for the past 25 years, now reaching 67% in 2023. Only 3.7% of graduates find white‑collar work, and fewer than 7% secure permanent salaried jobs.
The problem isn’t a quick fix: recovery of the small‑ and medium‑sized enterprises (SMEs) weakened by demonetisation and GST could partially mitigate the job crisis, but a new industrial policy is needed to revive manufacturing, which has fallen from 17% of GDP in 2015 to 14% today. Meanwhile, the share of agriculture employment has risen, signaling “disguised unemployment” as workers leave farming for services or manufacturing.
The sector that once promised a middle‑class golden ticket—software—now faces AI‑driven disruption. Goldman Sachs estimates 8‑12% of non‑farm jobs could be replaced, and IT hiring has stalled. Industry leaders like Neeti Sharma and Devina Mehra note that graduates may have to pivot from knowledge‑based roles to vocation‑oriented work such as plumbers, electricians or mechanics.
This realignment invites a new challenge: the generation who entered university with high expectations must confront a labor market where white‑collar jobs are shrinking. The future of India’s political stability depends on whether the Modi government can implement sweeping educational reforms, stimulate manufacturing, and ensure a skills‑based industry capable of absorbing millions of youth into quality employment.
