The sluggish pace of hiring lends itself to a vicious cycle in an economy already reeling from weak consumption demand, which has dragged growth down to a five-year low in the March quarter. For Prime Minister Narendra Modi, rising joblessness risks stoking social tensions and tarring India's image as an attractive investment destination.
Total employment increased from 5.44 million as of March 2017 to 5.78 million in 2018, which is an increase of 6.2%, according to the Care. In the year ended March, that increase was lower at 4.3%, with the total number of employed personnel standing at 6.03 million.
Care said that while sectors like hospitality saw increased outsourcing, there was a decline in headcount for iron, steel and mining companies due to lower growth in production and increased bankruptcy related issues. India's banking sector boasts of one of highest stressed asset ratios, a factor that has also weighed on hiring.
"Banks have resorted to both outsourcing as well as rationalisation -- both compulsory and voluntary -- to control headcount," Care said, adding that some weak state-run banks were barred from new hiring because they were ring-fenced while boosting their capital base and bringing down their non-performing loans.