Transformation of India's Middle Class and Employment Patterns

Public vs. Private Sector Employment

• Post-independence, India's middle class was significantly shaped by public sector employment.
• As of March 31, 1995, public sector employment stood at 194.7 lakh compared to 80.6 lakh in the private sector.
• By March 31, 2012, public sector employment had decreased to 176.1 lakh while private sector employment increased to 119.7 lakh.
• The trend of shifting from public to private sector employment accelerated post-1991 economic reforms.

Decline in Public Sector Employment

• Indian Railways saw a decline in regular employees from 16.5 lakh in 1990-91 to 11.9 lakh in 2022-23, with a slight increase to 12.5 lakh recently.
• Central public sector enterprises reduced employment from 22.2 lakh in 1990-91 to 8.1 lakh in 2023-24.

Growth in Private Sector - IT and Banking

Information Technology (IT) Sector:

• Companies like TCS and Infosys expanded significantly post-reforms, further accelerated by the COVID-19 pandemic.
• Total employment in major IT firms increased from below 11.5 lakh in March 2020 to over 16 lakh by September 2022.

Banking Industry:

• In 1991-92, public sector banks dominated with 87% of 9.8 lakh employees.
• By 2022-23, private sector banks overtook public banks with 8.74 lakh employees compared to public banks' 7.5 lakh.
• Major private banks like HDFC and ICICI have comparable employee numbers to state-owned banks.

Employment Challenges and Opportunities

• Liberalisation and globalisation led to job creation, primarily in services like IT, finance, health, tourism, and retail.
• India lacks a structural transformation where surplus agricultural labor shifts to high-productivity and income sectors like manufacturing.
• The farm sector's workforce share reduced from 64% in 1993-94 to 46.2% in 2023-24.
• Manufacturing's workforce share decreased to 11.4% in 2023-24.

Informal and Low-Paying Jobs

• Services sector expansion has led to informal and low-paying jobs.
• Examples include Uber drivers, Zomato and Swiggy deliverers, and gig economy workers.
• These jobs do not significantly contribute to joining the "Middle Class 2.0".

The document underlines the shift in employment from public to private sectors in India post-economic reforms, highlighting significant growth in IT and banking industries. However, it also points out the persistent employment challenges due to the lack of structural transformation and the prevalence of informal, low-paying jobs.