India’s labor force continues to fall behind that of China, despite India having the world’s largest population, according to a report by Oxford Economics. The report states that India’s labor force participation rate is only at 51%, trailing China by 25 percentage points. In order to achieve the same labor force size as China by 2030, India would need to achieve a participation rate of over 70%. The report also highlighted the low rate of female employment in India, with women making up only 25% of the workforce, even lower than countries with smaller economies such as Pakistan and Bangladesh.
One of the reasons for India’s lagging labor force is attributed to its education and health-care standards. The report states that India’s human capital levels, which determine the productivity of its labor force, rank behind China and other regional peers. The literacy rate in India is 74%, compared to 97% in China, and the quality of education is weak. The pandemic has exacerbated these issues, causing learning disruptions and delayed proficiency in reading and calculation, especially in rural areas. Additionally, India’s life expectancy at birth is lower than China’s, and there is a significant shortage of doctors in the country.
To address these challenges, the report emphasizes the need for increased funding in education and health care. Currently, education spending in India only amounts to 2.9% of GDP, falling behind the government’s target of 6% in 2020. Government expenditure on health care has also increased but remains lower than many other countries. Raising funding in these areas is crucial to improving the quality of education and health care and boosting India’s labor force and productivity.