India’s youth unemployment rate fell to 9.9% in 2025, below the global average of 12.6%, according to SBI Research. The report cited estimates from the International Labour Organization and said India’s labour market has shown gradual improvement in recent years.
Urban youth unemployment also improved sharply. The rate dropped to 13.6% in 2025 from 16.8% in 2022, helped by rising opportunities in manufacturing, services, and other non farm sectors. Agriculture’s share in total employment also declined to 43% as workers slowly shifted to other industries.
However, the report said major challenges still remain. Nearly 25% of Indians aged 15 to 29 are still outside employment, education, or training. SBI Research also noted that less than 5% of Indian youth have received formal vocational training, highlighting weak skill development across the country.
The report found that nearly 1 in 4 casual workers in India are earning below the legal minimum wage based on PLFS 2025 data. The biggest wage violations were reported in Chhattisgarh, Odisha, and Jharkhand, raising concerns over worker protection and enforcement.
India’s labour market also remains heavily informal. Around 80% to 90% of workers are still outside the formal sector, while agriculture continues to employ about 43% of the workforce. Only 13.7% of workers are employed in enterprises with more than 20 employees, showing limited large scale formal job creation.
In April, Uttar Pradesh approved an interim minimum wage hike of up to 21% after violent protests by workers in Noida factories. However, the state government rejected demands seeking a Rs 20,000 monthly minimum wage for workers.
SBI Research also warned that the rupee’s depreciation is “not in line with India’s macro fundamentals” and called for structural reforms to address the balance of payments deficit. The rupee has weakened around 10% since April 2025, while cumulative FII outflows of about $6.4 billion have added further pressure.
The report suggested measures beyond exchange rate management, including a special dollar window for oil firms and RBI intervention in the bond yield curve. SBI also said the Centre’s SASCI capex loan scheme partially crowds out state spending, with revenue deficit states cutting their own capex by around Rs 0.55 for every Rs 1 received under the scheme.
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