A new report by the Institute for Competitiveness has revealed a stark disconnect between higher education and employment outcomes in India, showing that just 8.25% of Indian graduates are employed in roles that match their educational qualifications.
Based on data from the Periodic Labour Force Survey (PLFS) and aligned with the National Classification of Occupations (NCO) framework, the report outlines how over half of Indian graduates are engaged in lower-skill roles-such as clerical work, machine operation, and sales-classified as Skill Level 2 occupations.
Overqualification Widely Prevalent
The findings show that even among workers with qualifications suitable for Skill Level 4 jobs (the highest classification), nearly 28.12% are stuck in lower-tier roles, suggesting widespread overqualification and underemployment.
This trend of mismatch is further visible in Skill Level 3 occupations, where only 8.25% of appropriately qualified individuals are in roles that match their educational level.
Underqualification Also A Challenge
The report also flags underqualification as a problem. Roughly 8.56% of workers in Skill Level 2 jobs lack the necessary educational background, possibly due to informal training or on-the-job learning. This highlights the need to strengthen vocational and technical education (TVET), which currently lacks widespread accessibility and robust infrastructure.
Regional Disparities Worsen the Problem
States with dense youth populations such as Uttar Pradesh, Bihar, Madhya Pradesh, and West Bengal are especially vulnerable to the growing skills mismatch. These regions face risks of chronic underemployment, increased migration to urban centers, and a weakening local economy due to skill redundancy.
In 2023-24, states like Bihar and Meghalaya still had over 60% of their workforce with only Skill Level 1 education-the lowest category-while states like Goa and Kerala reported significantly lower shares in this bracket.
Education Access Still Uneven
India has achieved near-universal enrolment at the primary level, but the transition to higher education remains inconsistent across states. For instance, while West Bengal and Kerala have shown impressive gains in female enrolment in higher education, Lakshadweep witnessed a dramatic decline of nearly 90% over the past decade.
Alarmingly, only 2.17% of India's population has qualifications suitable for Skill Level 4 jobs. Even at the state level, disparities are stark: Chandigarh leads with 11.21%, whereas states like Bihar (0.45%) and Jharkhand (0.70%) lag significantly.
Upskilling Holds Economic Promise
According to the report, moving workers from intermediate to advanced skill levels could increase wages by up to 149%, offering a major boost to household incomes and national GDP. But this transformation demands greater investment in higher education-currently, India allocates only 3.06% of its budget to the sector. The estimated funding gap stands at Rs 88,000 crore.
