As India goes to polls, Al Jazeera looks at its intensifying unemployment crisis and the politics that surround it.

Bengaluru/Mandya – Shehla Blossom moves from one workstation to the other, collating the hourly production of branded Arabian thobes being manufactured at an export-oriented garment factory in Mandya, a small town about 100km from Bengaluru in south India.

The task is hardly the “company job” the 23-year-old dreamed of when she finished her postgraduate degree in commerce. Her monthly salary of 5,000 rupees ($79) is less than what the factory workers make.

After a year spent looking for a job, she said she “compromised” because the clock was ticking on her student loans. Her single mother, a helper at the local “anganwadi”, a government-run childcare centre, earns nearly the same as her.

“My degrees feel wasted. I’m the first postgraduate in my neighbourhood, so people keep asking why I don’t have a company job,” said Shehla.

“People don’t get that it’s not just about qualifications. You either need experience or must have the right connections.”

Back from his third job interview this week, Mohan Kumar S shows the three resumes he carries, never sure which one to send: one has him down as mechanical engineer, another mentions his post-graduate qualifications in thermal power engineering.

The third reveals the two jobs he’s worked since his graduation in 2017. Six-month contracts, both factory jobs did not require more than a technical diploma, Mohan said. He was paid around 15,000 rupees ($216) a month.

“I don’t want to hide anything. But just today an interviewer told me I’m too qualified,” said the 24-year-old, who is a Dalit – one of the former “untouchable” caste who still face segregation and social exclusion in India.

Like Shehla, he insists “references” matter. “Every company asks for a referral. And that’s where caste connections, or the lack of it, hold you back,” he explained.

Mohan has applied to be a “delivery partner” at a popular app-based food delivery company, part of India’s rapidly-growing gigs economy, where scores of his engineer friends work.

His father, a security guard at a factory on Bengaluru’s outskirts, is against it. “He thinks it’s beneath someone like me, who was ranked second in engineering master’s. But one needs money to be able to wait also, no?”

India’s youth have struggled to get jobs [Deepa Kurup/Al Jazeera]

Shehla and Mohan, both first-generation university graduates from smaller towns, embody the grim reality facing the 10 to 12 million young Indians entering the labour market each year and the interlinked crises of unemployment and what economists call underemployment, or unemployment in disguise.

This is how India’s much-talked-about demographic dividend, economists say, is being squandered.

Nearly two-thirds of Indians are of working age, between 15 and 64, but an increasing number of them are sliding into the country’s climbing unemployment statistics.

At 6.1 percent, India’s formal unemployment is the highest it’s been in 45 years, according to a leaked government report. It has almost tripled in the six years since 2011-2012 when the last comparable survey was conducted by the National Sample Survey Office.

This figure doesn’t reflect the extent of the problem; many who are unable to find formal jobs settle for low-paying, irregular work in India’s vast informal sector, which employs 81 percent of the workforce.

The politics of unemployment

In India’s ongoing national polls, the leaked job report is the arrowhead of the opposition parties’ campaign against the Hindu nationalist Bharatiya Janata Party (BJP) government.

Political opponents frequently remind Prime Minister Narendra Modi, who is seeking a second term, of his unfulfilled promise to create 10 million new jobs every year.

Modi has repeatedly said that India’s government statistics don’t capture the complete employment picture. The problem, he has said, is not one of the lack of jobs, but that of data.

The government’s refusal to formally release employment figures triggered the resignations of two prominent members of the National Statistical Commission (NSC) in January.

Unemployment figures in the leaked report also contest official narratives on two major economic policies. The survey is the first official appraisal of the aftermath of Modi’s decision to ban 85 percent of India’s currency in 2016 and to chaotic roll out a national tax code, the Goods and Services Tax, the year after.

PC Mohanan, the NSC’s interim chairman who resigned in protest, told Al Jazeera, “The suppression of the employment report was part of a general attempt to maintain certain narratives of the government regarding economic performance and job scenario.”

In 2016, the Modi government also discontinued the Labour Bureau’s household and enterprise-level employment-unemployment surveys.

Young, educated and unemployed

Over the next two decades, roughly 18 to 20 million Indians will enter the job market every year, the Indian census shows. But half of them do not enter the workforce, according to the leaked report.

India’s gross enrolment ratio in higher education has risen from 19.4 to 25.8 percent between 2010 and 2018. This is one reason why the young, 15 to 26 years of age, are over-represented in unemployment figures: having invested heavily in higher education, many would rather wait for a formal job than enter informal, low-paying employment.

Chaithra TK, a 24-year-old economics postgraduate, has been “sitting at home”. She said she’d rather be out of work than “settle” for a job that doesn’t match her qualifications.

Chaithra TK, an economics postgraduate, is waiting for a job [Deepa Kurup/Al Jazeera]

Her family of landless agricultural daily wage labourers borrowed heavily from relatives and friends to put her through a private university, paying tuition of around 150,000 rupees ($2,150).

They’ve been supportive but are now unhappy that she’s been jobless for two years, even though they know how hard she worked, studying late into the night after a long commute to attend classes in Mandya town.

“It was my dream to be a postgraduate. But now, the market only offers small jobs and that too needs references. It’s not just the poor pay; I don’t want to be trapped forever in jobs that need no more than high-school training,” she said.

Many university graduates from her village have returned to join their families in farming, she said, which is not an option for her because her family has no land to fall back on. Her quest for a “respectable job” led her where hordes of graduates are now heading: preparations for entrance exams for a government job.

In the absence of employment numbers, anecdotal accounts of a glut of applicants for even the lowest-grade jobs advertised by the government are revealing.

Applications to India’s largest employer, Indian Railways, serve as a prime example. In 2019, nearly 19 million applied for 62,907 group-D vacancies. At least 44 percent of the applicants were university graduates or postgraduates, including a half-million engineers, according to railway recruitment board figures.

Group-D jobs only require a high school diploma. The monthly basic pay at entry level for the jobs, which include track-men, gatemen and helpers in various departments, is 18,000 rupees ($258).

The media is awash with reports of a superabundance of candidates applying for state and central government jobs. In another instance, the Uttar Pradesh police advertisement for 62 peon posts received 93,000 applications, including 3,700 PhD holders, 50,000 university graduates and 28,000 postgraduates. The minimum requirement for the job was a primary education.

This spike in demand for lower-grade government jobs attests to a crisis that isn’t just about a scarcity of jobs but that of “quality” employment, in terms of remuneration and job security.

Another indicator that a private sector job is no longer the “dream” is the widespread agitation by many powerful caste groups – such as Patels, Jats, Gujjars and Marathas – who claim financial disadvantage despite their dominant social status.

They demand the inclusion of their caste into the Other Backward Classes (OBC) list, which would make them eligible for reserved spots in government jobs and higher education.

In January, hot on the heels of electoral defeat in three key BJP-held states, the government announced a 10 percent quota in government jobs for economically weak sections, or those with annual earnings less than 800,000 rupees ($11,430).

However, a look at the government’s record shows that recruitment through three major central government agencies fell by 11 percent between 2014 and 2017 – Modi’s first three years in power. The existing employee strength in central public sector enterprises fell by 10 percent between 2013 and 2017.

Meanwhile, government posts lie vacant by the millions: over 412,752 central government civilian jobs, about one million state and central government teaching posts, and nearly half-a-million jobs in the state police.

Sector-wise employment appraisal

Any appraisal of jobs outside of government jobs is hampered by rampant informality. But, snapshots from the organised sector indicate the promise of jobs expansion remains unmet.

Take the manufacturing sector, which employs 10 percent of India’s workers. Employment growth fell in 2012-2013 and has since remained in the single digits. It rose modestly between 2014 and 2017, the last available data from the Annual Survey of Industries.

Net employment in organised manufacturing rose by just 1.02 million in this period.

This falls significantly short of the targets set by the BJP government to create 100 million manufacturing jobs by 2022. These targets were associated with Modi’s flagship “Make in India” initiative which aimed to make the country a global leader in manufacturing.

Manufacturing contributes 16 percent of India’s GDP, well below the government target of 25 percent.

In the wake of the note ban, fresh investments in manufacturing fell sharply as projects were stalled, the Centre for Monitoring Indian Economy, a private research firm, reported.

In the services or tertiary sector, a leading source of formal employment is the information technology sector, which contributes 10 percent of national income.

IT employment growth slid from double digits in 2011-2012 to low single in recent years, according to industry body Nasscom.

The software sector, which was the “dream” for the highly-qualified, especially engineers, can no longer absorb the roughly one million engineers graduating every year. This glut means that large numbers of fresh engineers are either unemployed or underemployed.

Worse, in India’s software services hubs – Bengaluru, Pune, Hyderabad and Chennai – many big IT companies shed workers in 2015 and 2017, the media reported.

Government schemes galore

On employment, the BJP’s policies underlined promoting export-oriented manufacturing, incentivising self-employment and entrepreneurship, and boosting employability through skills development.

For instance, the Pradhan Mantri Mudra Yojana (PMMY) – called the “job multiplier” by Modi – extends collateral-free credit to microenterprises. But 88.6 percent of its loans were categorised “Shishu”, where credit is capped at 50,000 rupees ($716), its annual report said.

These micro-loanees are unlikely to be employment multipliers or provide decent jobs. The government has withheld its survey of jobs generated under the scheme.

Beyond self-employment, there are numerous government incentives through which the government claims to have unleashed India’s entrepreneurial spirit.

The experience of Narasimhamurthy, owner of SS Apparels in Mandya, an export-oriented garment factory employing 70 women, indicates otherwise.

His application for central government-funded subsidies for small and medium textile manufacturing units has been pending for nearly two years. His capital investment of 8,000,000 rupees ($114,500) was raised through multiple loans that he had hoped to pay back with the promised investment and interest subsidies, totalling 40 percent.

“This is why many companies don’t last more than a couple of years. Often, the subsidy is delayed so much that the entrepreneur can only use it to pay off the interest and shut shop,” said the 40-year-old first-time entrepreneur, a Dalit.

He said getting a bank loan or requisite permits were hard without access to the “right caste networks”, which is why he is the only Dalit entrepreneur he knows.

Academic research corroborates this: Researcher Aseem Prakash’s book Dalit Capital details how a majority of Dalit entrepreneurs were denied credit by state-owned banks and government agencies.

Narasimhamurthy’s observations on the mortality of new firms also square with the experience of start-ups, another core focus area of the government’s Startup India initiative.

A 2017 Nasscom report found that nearly a quarter of start-ups shut down within two years of being set up. This was attributed to the inability to scale up, issues with market demand and inability to raise funds.

The government’s flagship Skills India mission also fell short of its promise.

The Pradhan Mantri Kaushal Vikas Yojana (PMKVY), which set out to offer free skills training to 10 million Indians by 2020, had achieved barely one-third of its target by January 2019. And barely one million of them landed jobs, the government said.

BJP’s national Vice President Vinay Sahasrabuddhe told Al Jazeera that critics present a “distorted scenario” because government agencies do not account for livelihood opportunities.

“The concept of jobs is undergoing sea-change world over. Now it is about livelihood opportunities, which are being created in great numbers thanks to several [government] welfare programmes.”

Jobs: a structural crisis

In the ongoing elections, opposition parties have focused on the BJP’s unmet promises on employment but much of what they’re saying now mirrors what the BJP had said in its 2014 campaign.

That’s because the employment problem is structural.

First, India’s economic growth story – averaging 6.6 percent in 1990-2000 and 6.8 percent in the current decade – has been characterised by economists as “jobless growth”.

This means employment became delinked from growth. So, even as the economy grew faster it did not generate jobs at a fast enough rate.

Second, India’s economic expansion in recent decades was led by its services sector.

So, while farm workers exited agriculture in large numbers, manufacturing did not expand. These workers were absorbed into construction and services, both sectors dominated by low-paying, low-skilled and informal jobs.

The services sector contributes to more than half the economy but employs only 28 percent of India’s workforce. This gap is the widest in India among top 15 services producer nations, India’s Economic Survey (2016-2017) said.

This unusual trajectory of economic transformation sets the stage for the unemployment crisis that India faces today.

For now, the crisis features widely in the campaigns and manifestos of India’s major political parties. Whether future governments will address these structural failures will determine the course of India’s flailing demographic dividend.