India's economy is expanding steadily and sectors such as information technology are winning new jobs for the country.
For several years after finishing college, 32-year-old Lakshmi Narayan looked for a job in an office. When the hunt proved futile, he began driving a delivery van.
He said he had hoped to do something better, but nothing came his way. Now, he does not even try, preferring to hold down the job he has.
For people like Mr. Narayan, headline-grabbing news about information technology jobs flowing into India from Western countries has little meaning.
India's booming IT and software sector employs about two million people. But R. Nagaraj, an economist at Bombay's Indira Gandhi Institute for Development Research, notes that is a fraction of the country's work force of 400 million.
"These jobs are concentrated in few pockets like Bangalore, Hyderabad and Gurgaon where they are very visible and these young boys and girls get fairly high paying jobs, but these are only small specks in the ocean of unemployed people in towns and villages," he said. "If you go to smaller towns, you find that educated young people do not find adequate jobs."
With one of the fastest-growing economies in the world, it may seem odd that India is struggling with high unemployment. That is India's paradox, say economists. Its economy is growing fast, but not fast enough to hand out jobs to 10 million people who enter the work force each year. And there is a huge backlog of people who lost jobs in recent years and have yet to find new ones.
The official unemployment rate is about eight percent of the working population. Economists, however, say the real rate is much higher, because millions of people have given up looking for jobs or have never registered as unemployed.
In the decade since India liberalized its economy, companies have steadily laid off workers as they focused on efficiency and technology to become globally competitive.
State-owned businesses pared their payrolls by offering early retirement plans to employees. The job losses went all the way from managers to factory workers. An estimated 15 percent of all manufacturing jobs have been lost since 1997.
The manufacturing sector is expanding but it is not creating new jobs. Many factory managers, discouraged from taking on new employees by laws that make firing impossible, are using automation to avoid adding staff.
Sundram Fastners, a Madras exporter of car parts, is one such company. Its radiator cap assembly line employs just 33 workers, the same number as a decade ago, even though production has doubled. The factory manager, R. Premkumar, says that holding the line on hiring has helped the company remain competitive in the global market.
"We are also relying on automation. We wanted to have the overheads come down," he said. "More of reliability is getting achieved than what could be done by the pure hand."
Others, such as the Tata group, one of India's largest conglomerates, have cut their work forces by nearly one-third in recent years despite expansion.
Jayati Ghosh, an economics professor at Jawaharlal Nehru University, says the situation is dismal in both urban and rural areas. In cities, an estimated 10 percent of Indians are employed in the organized sector, the rest are in unregulated jobs such as pulling rickshaws. And, she says, in rural areas, most people find work for only half the year, when crops are sown and harvested.
"In the urban areas, there has been a switch from formal and organized work to unorganized sectors, which means the work is more insecure, it is more casual, it is more self-employed and home-based work," explained Ms. Ghosh. "They have lost their regular jobs and now they are pushing a cart selling a fruit on the streets. Agricultural employment is lower than it was, so you really have a complete stagnation. "
Economists and government planners say the problem is huge, but can be tackled. Mr. Nagarraj at the Indira Gandhi Institute says India's bulging foreign exchange reserves of $120 billion and food reserves offer an opportunity.
"Two things we have positive: we have large stocks of foreign exchange and food grain which we did not have earlier, and this can be used effectively to create employment and industrial growth," he said. "A large-scale rural works programs is something which has to be undertaken to make any dent in this mass unemployment."
The job shortage was considered a major factor in the election defeat of the previous Hindu nationalist government last May. Aware that it must address the problem, the new Congress government recently introduced a food-for-work program in the country's poorest districts.
But government officials admit that creating enough employment for India's billion plus people is a challenge that has no easy or quick answers.