India’s education system has seen a massive expansion in the past two decades, producing millions of graduates every year. From new universities and private colleges to digital learning platforms and skill missions, the country has witnessed an education boom like never before. Yet, for many young Indians, degrees have not translated into meaningful jobs. The growing number of educated but underemployed youth reflects a deep mismatch between what education offers and what the job market demands. As per official data, unemployment among graduates is more than double the national average, and many are working in jobs far below their qualifications.

I am writing about this because the issue of underemployment is becoming one of the most urgent challenges facing India today. We often celebrate rising literacy and enrolment rates, but fail to ask what happens after graduation. Are we truly preparing our youth for real work, or just creating paper degrees? The answer has implications not just for individuals, but for India’s economy as a whole. Understanding why our education system produces so many degree-holders without jobs can help us rethink how we teach, train, and employ the next generation.

The education boom that promised progress

India’s higher education sector has expanded rapidly since the 2000s. The number of universities has grown from around 250 to over 1,100, and colleges have crossed 43,000 across the country. Millions of young people now have access to higher education, especially in engineering, management, and arts. Government initiatives like the National Education Policy (NEP) 2020, Skill India Mission, and Digital University projects were launched to improve learning outcomes and employability.

However, the promise of prosperity through education has not materialised for many. Each year, lakhs of graduates find themselves struggling to secure decent jobs. In fact, a recent Centre for Monitoring Indian Economy (CMIE) report showed that unemployment among graduates is around 17–18%, much higher than the overall rate of 8–9%. This shows that having a degree is no longer a guarantee of employment.

Why educated youth are struggling

The biggest reason behind the problem is the mismatch between skills and market needs. Most colleges focus on theoretical knowledge, with little exposure to practical training or internships. Many graduates lack technical or communication skills that employers expect.

Some key reasons include:

• Outdated curriculum that doesn’t match today’s industries.
• Limited focus on soft skills like teamwork, problem-solving, and adaptability.
• Low industry-academia linkages, meaning students rarely get real-world experience.
• Overcrowding in traditional fields like engineering or arts, while emerging sectors like AI, logistics, and renewable energy remain short of skilled manpower.

Even in states with high literacy rates, such as Kerala or Tamil Nadu, underemployment remains a challenge because job growth has not kept pace with the rising number of educated youth.

The rise of underemployment

Underemployment is often worse than unemployment. It means people have jobs but are not using their full skills or earning what they deserve. For instance, a B.Tech graduate working as a delivery executive or a postgraduate teaching part-time in a tuition centre. According to a 2024 Azim Premji University study, nearly 35% of graduates in India are underemployed, often in informal or low-paying sectors.

In smaller towns, educated youth take any available job just to make ends meet. Women are particularly affected, as fewer opportunities exist for them in rural and semi-urban areas. In many cases, cultural and family expectations further limit their participation in the workforce.

Quality vs quantity in education

India produces a large number of graduates, but the quality of education varies widely. Many private colleges lack proper infrastructure, experienced faculty, or modern teaching methods. Students often graduate without critical thinking or technical ability. Employers, on the other hand, struggle to find candidates with the right skills despite the huge talent pool.

According to the India Skills Report, only about 45% of graduates are considered employable. This shows that access to education alone is not enough — what matters is the relevance and quality of that education.

The bigger economic picture

The underemployment crisis has wider economic effects. India has a youth population of over 600 million, which could be a massive advantage if productively engaged. But without enough quality jobs, the country risks turning its demographic dividend into a demographic burden.

Low job satisfaction and unstable incomes among educated youth also lead to frustration and social unrest. It reduces productivity and discourages future generations from valuing education as a pathway to success. Economists warn that without structural reforms, India may face a “jobless growth” phase — where the economy expands, but employment opportunities remain stagnant.