India's emergence as the world's fourth-largest economy masks a structural weakness that should concern policymakers across South Asia, according to a firsthand account published by thedailystar.net. The analysis, drawn from 14 months of observation across six Indian states, concludes that the country's growth model has become dangerously top-heavy — producing aggregate wealth and high-tech showcases while failing to create enough middle-income jobs for its massive youth workforce.
What the numbers hide
The headline figures are impressive: GDP above $4 trillion, growth rates between 6% and 8%, a surging stock market, and globally admired digital infrastructure. Western capitals increasingly view India as a democratic counterweight to China. But behind these aggregates, thedailystar.net reported, lies a different reality. The economy has generated elite wealth and urban enclaves of prosperity, along with globally competitive service industries. What it has not generated is broad-based middle-income employment.
The core problem is straightforward. India moved too quickly toward a service-led economy before completing industrialisation, skipping the labour-intensive manufacturing stage that historically created stable mass prosperity in Britain, Germany, Japan, South Korea, Taiwan, and China. Vietnam is now following that path, and Bangladesh has done so in part through garment exports. India was expected to do the same. It did not.
A workforce the size of Belgium every year
Roughly 10 to 12 million young, educated Indians enter the labour market annually — comparable to adding a country the size of Belgium each year. No nation can absorb such numbers through software parks, finance offices, and high-end services alone. The economy needs factories, warehouses, construction supply chains, transport systems, and medium-sized enterprises capable of hiring by the thousand. India has not produced enough of them.
Official labour statistics and private estimates differ, but the broad picture is unmistakable. Youth unemployment remains high, especially in cities and among graduates. Urban youth unemployment has often ranged in the mid-to-high teens. In some regions, female youth unemployment has been dramatically higher. Even these figures understate the problem because of widespread disguised unemployment: several family members sharing work that would productively occupy one person, counted as employed but not economically advancing.
Recruitment frenzies reveal the depth of distress
Nothing captures the scarcity of proper placement better than the stampede for low-level public jobs. In 2022, Indian Railways announced around 35,000 vacancies. More than 12 million people reportedly applied — roughly one opening for every 357 applicants. When exam rules changed, protests erupted in Bihar and elsewhere. In Uttar Pradesh in 2024, more than 93,000 applicants reportedly sought 62 peon posts, many of them graduates, engineers, and postgraduates competing for basic clerical and messenger work.
Economists call this jobless growth: rising output without sufficient employment creation. Capital-intensive sectors such as finance, telecoms, digital platforms, and automated manufacturing can rapidly boost GDP while adding relatively few jobs. Shareholders gain faster than workers.
Missed manufacturing targets and the China Plus One test
In 2014, the Indian government launched "Make in India," promising to raise manufacturing's share of GDP from around 16% to 25%. A decade later, that share remained well below target and by some measures slipped closer to 13%-14%. During the global "China Plus One" shift, as multinationals sought to diversify away from China, they did not move overwhelmingly to India. Many expanded instead in Vietnam, Mexico, and Bangladesh.
Vietnam, with a population under 100 million, became a major exporter of electronics, footwear, leather accessories, and apparel. Bangladesh, despite far fewer resources, built a garment export machine exceeding $45 billion annually in recent years. India lost ground in precisely the labour-intensive sectors that could have employed millions: textiles, leather goods, footwear, toys, and light engineering.
Why it matters for Bangladesh and the region
The practical barriers are well documented: slow and politically contentious land acquisition, uneven power reliability, ports and logistics more costly than best-in-class Asian competitors, contract enforcement that can take years, and dense regulatory burdens. An Observer Research Foundation study found more than 69,000 compliance requirements for doing business in India, with over 26,000 clauses carrying imprisonment provisions. Medium firms often spend disproportionate time on compliance rather than expansion.
For Bangladesh, the lesson is clear. The country has already demonstrated that labour-intensive manufacturing — particularly garments — can generate mass employment and export earnings. But the Indian experience warns against premature deindustrialisation or over-reliance on services before a broad industrial base is secure. As Bangladesh navigates its own graduation from least-developed-country status and seeks to diversify beyond garments, the Indian case underscores the importance of fixing land, power, logistics, and regulatory frameworks to attract the kind of factories that hire by the thousand.
India's top-heavy boom and the lesson for Bangladesh is not that growth is unimportant, but that its composition determines whether prosperity spreads or concentrates. The region's demographic dividend depends on getting that composition right.