India’s top-heavy boom and the lesson for Bangladesh

India’s top-heavy boom and the lesson for Bangladesh khairul.jahin@… Tue, 05/05/2026 - 11:54 .full-viewport-wrapper img { width: 100%; object-fit: cover; object-position: center; height: 100%; max-height: calc(100vh - 71px); } Image India’s top-heavy boom and the lesson for Bangladesh During my 14 months as Minister (Press) at the Bangladesh High Commission in New Delhi, I observed India more from metro rails, trains, buses, provincial roads, and a daily dose of discussions with my colleagues in the diplomatic circle and journalistic peers from the Indian media. Personal travel and official work took me across Uttar Pradesh, Uttarakhand, Rajasthan, West Bengal, Andhra Pradesh and Himachal Pradesh. I spent long hours reading newspapers, watching television, speaking with journalists, researchers, and policy professionals in Delhi, and observing how ordinary citizens moved through the economy. The impression was consistent. India possesses enormous capability, but it also carries a deep structural imbalance. It is a country of scale without enough spread and wealth without enough diffusion. And also a country with very large ambitions without sufficient economic architecture. The dominant global story is flattering. India is now the world’s fourth-largest economy, with output above $4 trillion. Growth has often ranged between 6% and 8%. Its stock market has surged. It landed a spacecraft near the Moon’s south pole. Its digital payments network is admired internationally. Western capitals increasingly view India as a democratic counterweight to China. None of this is false. But none of it is sufficient. Behind the aggregate numbers lies a more difficult truth. India’s growth model has become top-heavy. The central weakness is straightforward. India has generated elite wealth, urban enclaves of modern prosperity and globally competitive service industries. It has not generated enough broad middle-income employment. The country moved too quickly toward a service-led economy before completing industrialisation. In doing so, it skipped the stage that, elsewhere, historically created stable mass prosperity: labour-intensive manufacturing at scale. Every year, roughly 10-12 million young, educated Indians enter the workforce. That is comparable to adding a country the size of Belgium to the labour market annually. No nation can absorb such numbers through software parks, finance offices and high-end services alone. India has generated elite wealth, urban enclaves of modern prosperity and globally competitive service industries. It has not generated enough broad middle-income employment. The country moved too quickly toward a service-led economy before completing industrialisation. It needs factories, warehouses, construction supply chains, transport systems and medium-sized enterprises capable of hiring by the thousand. India’s economy 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 been in the mid-to-high teens. In some regions, female youth unemployment has been dramatically higher. Yet even these figures understate the problem because India suffers heavily from disguised unemployment: several family members sharing work that would productively occupy one person. They are counted as employed, but they are not economically advancing. Stagnation in proper placement Nothing captures this scarcity better than recruitment frenzies 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. This was a classic labour-market distress. In Uttar Pradesh, more than 93,000 applicants reportedly sought 62 peon posts in 2024, many of them graduates, engineers and postgraduates. These are jobs involving basic clerical support, file movement and errands. When highly educated youth compete in such numbers for messenger-level work, GDP headlines become less persuasive. Families have paid for degrees, but the economy has not created matching opportunities. Economists call this jobless growth: rising output without sufficient employment creation. India has become one of its clearest large-scale examples. 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. Historically, countries that lifted hundreds of millions out of poverty followed a different route. Britain, Germany, Japan, South Korea, Taiwan and China all industrialised first. Rural labour moved into factories, productivity rose, exports expanded, and a mass middle clas