Student-led protest for reforms in the Indian education system achieved its first win on Saturday. Dharmendra Pradhan has resigned, anti-leaks bill introduced in Parliament and fast track courts for better accountability have been announced. Even an education task force was set up.
Even as the current demands have been addressed, larger questions remain. How can our education system be empowered to ensure high employability of Indian youth?
For millions of young Indians, competitive examinations are not merely academic assessments. They are gateways to secure a government job. Families invest years of savings, coaching fees and lost income in the hope that clearing one examination will lift them from below poverty line status.
For the original NEET-UG 2026 examination 22.7 lakh candidates registered and 22.5 Lakh appeared as per the National Testing Agency (NTA). After the examination was cancelled, 19.9 lakh candidates returned for the June re-examination.
5.49 lakh candidates appeared for the UPSC Civil Services Preliminary Examination in 2026. As per data shared by the government. The commission ultimately recommended 1,009 candidates for appointment. Indian Railways, meanwhile, received more than 1.08 crore applications for 32,438 positions in its 2025 recruitment cycle.
Taken together, these figures show how heavily India’s young population depends on a limited number of educational and recruitment tests.
Understanding India’s employment numbers and impact on economic growth
The Economic Survey 2025-26 survey notes that economic growth depends not only on the size of the labour force (which is the largest in the globe), but also on its capabilities.
The issue closely mirrors a challenge Prime Minister Narendra Modi set out while chairing the 11th meeting of the NITI Aayog Governing Council last month.
“India’s demographic dividend is a historic opportunity that we cannot afford to lose,” PM Modi said. “Creating the right ecosystem for our youth through quality education, demand-driven skilling and employment opportunities must remain a priority,” he added.
The three elements PM Modi placed together: education, skills and employment are also where recent labour-market research points to a concerning disconnect. India is producing more graduates than at any point in its history, but the supply of stable, productive work has not necessarily expanded at the same pace.
College graduates rise, access to first job remains difficult
India has recorded substantial progress in the number of citizens enrolling for higher education. According to an analysis of government data done by researchers at Azim Premji University cited by Bloomberg, more than a quarter of young Indians now hold a degree, compared with around 4% in 1983.
The university’s State of Working India 2026 report, cited by Bloomberg, found that graduates earn roughly twice as much as non-graduates when they enter employment, with the earnings gap widening over the course of their careers. The difficulty, however, as per researchers lies in securing that first stable job.
The number of young graduates increased thirteen-fold between 1983 and 2023 to around 63 million. The number of unemployed young graduates, however, rose sixteen-fold to approximately 11 million over the same period, according to the 2026 Azim Premji University research highlighted by Bloomberg.
Graduate unemployment remains particularly concentrated among those entering the labour market. The university estimated that the unemployment rate was close to 40% among graduates aged 15 to 25 and around 20% among those aged 25 to 29.
Only a small share managed to obtain stable salaried work within a year of graduation.
Quality of employment is a concern
Bloomberg’s analysis of PLFS unit-level data provides a closer view of where young graduates end up.
Out of every 100 graduates aged 15 to 29 in 2025, 50 were employed. Twenty-six had regular salaried jobs. However, only four of the original 100 had jobs offering all three protections measured in the survey: an employment contract, paid leave and social security benefits.
Another 15 were unemployed and looking for work. Of the 35 who remained outside the labour force, 20 were engaged in domestic duties, all women in Bloomberg’s breakdown, while 14 were continuing in higher education.
The distinction between employment and employment quality is important. Graduates working as unpaid family helpers, casual workers or in jobs substantially below their qualifications are counted as employed, however, fail to resolve education-to-work transition.
It also helps explain why improvements in headline labour indicators can coexist with continued anxiety among students and first-time jobseekers.
Employability remains large part of the challenge
Part of the challenge lies in employability.
As per reports released by staffing firms in H1 of 2026, employers have repeatedly pointed to gaps between academic qualifications and practical capabilities, particularly communication, problem-solving, workplace experience and the ability to use emerging technologies.
As TeamLease co-founder Manish Sabharwal told Financial Express Digital, ‘employability is the only real job security.’
As per data shared by the Government via the latest Periodic Labour Force Survey, only 5% of Indians aged 15 to 29 reported receiving or having received formal vocational or technical training.
Whereas a large part of the workforce remains lodged in small, informal enterprises with limited access to capital, technology and professional management, firms that provide a livelihood but rarely a contract, structured training or a route upward.
This is why a graduate can be counted as employed while working as an unpaid family helper or in a job well below their qualification.
The demand side too remains a concern
The Economic Survey estimates it needs to generate an average of nearly 78.5 lakh jobs annually until 2030 in the non-farm sector to cater to the rising workforce.
Even though India’s latest official labour data shows signs of improvement there are signs of weakness in getting employed.
The unemployment rate among people aged 15 to 29 declined to 9.9% in 2025 from 10.3% in 2024, according to the Periodic Labour Force Survey, or PLFS. Rural youth unemployment fell from 8.7% to 8.3%, while the urban rate declined from 14.3% to 13.6%.
There was also a modest improvement in the composition of employment. Among all workers, the share in regular wage or salaried work increased from 22.4% in 2024 to 23.6% in 2025. The employment share of manufacturing rose from 11.6% to 12.1%, while that of other services increased from 12.2% to 13.1%.
Sabharwal calls this “employer poverty”. India has too few productive enterprises capable of absorbing skilled workers at scale. A large part of the workforce remains concentrated in small and informal firms that may provide livelihoods, but often cannot offer formal contracts, structured training, social security or a sustained path to higher wages.
Therefore, fixing how Indian youth compete for opportunity is necessary but creating enough opportunity to compete for is the far larger task, and the one on which the demographic dividend ultimately turns.