Himachal Pradesh, which recently declared itself almost fully literate, is now facing a complex web of structural challenges that are increasingly testing the resilience of its economy. The state is struggling to translate its human capital into meaningful employment opportunities, leaving a large segment of its educated youth without stable, full-time jobs.
Seasonal employment in agriculture and tourism, limited industrial diversification, and geographic constraints are creating persistent gaps in the labour market, while monsoon-related infrastructure losses and rising debt levels are compounding fiscal pressures. Interestingly, Chief Minister Sukhvinder Singh Sukhu on 08 September 2025 declared Himachal a “fully literate state” on International Literacy Day, highlighting its rise from a mere 7 per cent literacy rate to 99.3 per cent, surpassing the national average of 95 per cent.
Sukhu emphasised that this achievement reflects sustained efforts to provide quality education and called for ongoing reforms to meet modern educational needs, noting that Himachal also ranks first nationally in student-teacher ratio. However, experts told BW Businessworld that literacy alone is no longer sufficient; the state must now convert its human capital into stable, full-time jobs, even as monsoon deluges and rising debt threaten that transition.
Literacy Without Livelihood
The Ministry of Statistics and Programme Implementation (MoSPI) data of August 2025 indicated that nearly one in three people aged 15-29 in Himachal is unemployed. The data, covering the April-June quarter, showed youth unemployment at 29.6 per cent, over twice the national average of 14.6 per cent.
Parth Sharma, Mentor and Business Coach, Department of Entrepreneurship and Startups, Lovely Professional University (LPU), pointed out that while literacy, the ability to read and write, has been achieved, employability demands more. “Himachal’s education system has achieved diversity and inclusivity, but it has not kept up with marketplace needs,” he said. Technical, soft, and practical skills, he emphasised, are severely lacking, leaving many educated youths unable to compete for workplaces that demand beyond academic credentials.
In the hill state, a significant portion of graduates, irrespective of their discipline, prioritise preparation for government competitive exams over skill development, driven by the urgency to secure stable employment and support their families. Districts such as Shimla, Solan, and Nahan are dotted with students spending hours in government or privately owned libraries, focused solely on cracking these exams.
However, the pathway to public sector jobs has become increasingly uncertain. Recent years have seen exam leaks, cancellations, and prolonged court cases delaying results, leaving many aspirants in limbo. Some students have been preparing for over eight to nine years without success.
Notably, those unable to secure government positions within three to four years often turn to private firms, entering workplaces without relevant skills and starting from scratch. In industrial hubs such as Baddi and Paonta Sahib, higher positions in private companies are often held by non-Himachali employees who possess the requisite technical qualifications, a dynamic that has, to some extent, created unease among local youth.
“Himachal’s deep respect for government jobs adds another dimension. Public employment is still viewed as the safest and most prestigious route. Thousands of graduates wait on recruitment lists even as private and digital work expands. They now need stronger industry alliance and skilling must now move from ‘training for its own sake’ to ‘training for placement’, with real partnerships, apprenticeships and live projects in emerging sectors like renewable energy, logistics, digital commerce and hospitality management," said Ajay Shah, President, UpGrad Rekrut (erstwhile Co-Founder of Rekrut India).
He noted that even within industrial hubs such as Baddi, Nalagarh, Parwanoo, and Paonta Sahib, which together contribute over 30 per cent of India’s pharmaceutical output, career prospects remain limited. The reason, he stated, is that much of the value chain, design, R&D, product strategy, brand building and higher-paid roles are located outside the state.
Sectors With Potential, Barriers That Hold
Himachal Pradesh’s workforce faces a structural mismatch between available opportunities and sectors with growth potential. Experts see promise in agri-value chains (such as cold chains and fruit processing), sustainable tourism (eco-tourism, especially off-season), renewable energy, and IT-enabled or remote services. MSMEs and artisan clusters, too, are seen as potential employers. But they noted that barriers persist: lack of capital, poor infrastructure in rural or mountainous areas, insufficient vocational and digital skills, weak market linkages and investor confidence are all holding back scale.
Additionally, in the state, renewable energy and small-scale manufacturing projects, including micro-grid services and precision machining, face infrastructure gaps and low investor confidence. Meanwhile, IT and creative sectors are restricted by inconsistent digital connectivity and limited local training, and artisan clusters confront challenges of scale, quality control, and market access. These barriers collectively impede the translation of literacy into stable, full-time employment across the state.
Sharma argued that improvements, like certified modular training tied to actual employer demand, internships and apprenticeship programmes, digital literacy, and local skilling are essential. Shah has already seen promising early moves with his firm's partnerships with over 400 government schools in Himachal to build vocational training programmes for students from grades 9-12. But he stressed that scale, policy consistency and infrastructure investment are needed to turn these into widespread employment opportunities.
The nation’s labour market is grappling with underemployment, encompassing jobs that fail to fully utilise a worker’s skills, education, or available hours. Unlike unemployment, it is harder to measure, particularly given India’s broad employment definition, which counts anyone working at least one hour a week, including unpaid family labour, as employed. This contributes to high underemployment in the informal sector. To tackle underemployment, the firm estimates that 12.2 per cent annual growth is required, Morgan Stanley has said.
India's Youth Unemployment Paradox
Himachal’s crisis shows that literacy, while necessary, is insufficient without economic opportunity and infrastructure resilience. It also highlights how climate shocks (monsoon disasters) and fiscal mismanagement (rising debt, pension liability) can undercut development gains. For India as a whole, states that have similar high literacy rates must anticipate this shift from “educational outputs” to “employment outcomes,” integrating skills, industry collaboration, finance, and climate resilience.
According to the monthly Periodic Labour Force Survey (PLFS) released by the National Statistics Office (NSO) on 15 October, rising rural unemployment slowed labour market momentum in September. The overall unemployment rate edged up to 5.2 per cent in September from 5.1 per cent in August.
In rural areas, the unemployment rate for people aged 15 and above under the current weekly status (CWS) framework rose to 4.6 per cent from 4.3 per cent, marking the highest level since June, Business Standard reported. Urban unemployment also climbed, reaching 6.8 per cent in September from 6.7 per cent in August.
Gender-wise, the unemployment rate for men increased slightly to 5.1 per cent from 5 per cent, while for women it rose to 5.5 per cent from 5.2 per cent. The labour force participation rate (LFPR), which measures the share of people working or actively seeking work, increased marginally to 55.3 per cent in September from 55 per cent in August.
Youth unemployment among those aged 15–29 also rose, hitting 15 per cent from 14.6 per cent. In this age group, the rate remained unchanged for women at 17.8 per cent but increased for men to 13.9 per cent from 13.5 per cent.
In 2024, the International Labour Organisation (ILO) stated in a report that youth unemployment in India remains significantly higher than adult unemployment, reflecting a global pattern where young people are three times more likely to be unemployed. The report noted that despite rising educational attainment, insufficient job creation has pushed youth unemployment to around 15.1 per cent in 2020, with educated youths particularly affected.
Morgan Stanley has said that India’s economy must grow at an exceptional rate of 12.2 per cent annually to resolve its underemployment crisis. Amid US tariffs, the nation's economy expanded 7.8 per cent in the June quarter, exceeding expectations. Poverty continues to constrain household consumption, with about 603 million Indians living below the World Bank’s 2022 lower-middle-income threshold of USD 3.65 per day. The recently raised benchmark of USD 4.20 will likely push this number higher.
While India’s GDP is projected to grow at an average of 6.5 per cent over the coming decade, this will not generate enough employment. At least 84 million new entrants are expected in the workforce, and rising labour force participation rates from the current 60.1 per cent as of June 2024 would further amplify the challenge.
Monsoon Damage And Rising Debt Weaken The Economy
Himachal Pradesh’s economy has faced severe setbacks this year due to monsoon-related disasters, further straining agriculture, tourism, and local industry. Since 20 June 2025, the state reported 417 deaths, with 1,502 houses fully damaged and 6,503 partially destroyed, resulting in estimated losses of around Rs 4,582 crore. Public infrastructure was hit hard, with Rs 2,803 crore lost in the Public Works Department and Rs 1,405 crore in water infrastructure under the Jal Shakti department.
Tourism, which typically contributes over Rs 14,000 crore annually to the state’s GSDP, saw occupancy rates plummet from 70-80 per cent in previous years to just 10-20 per cent this monsoon, according to media reports. These losses, both in infrastructure and livelihood, reduce fiscal space and put further pressure on state government resources.
"The economy of Himachal Pradesh is heavily based on agriculture and tourism, which brings seasonal employment, not sustained work. There are only limited industries in certain locations, mountainous terrain, and out-migration, limiting employment creation. The economy produces a structural gap between educated individuals seeking work and actual employment," stated Sharma
Parallel to damage from weather, Himachal’s financial metrics reveal mounting stress. A recent Comptroller and Auditor General (CAG) report found that the state’s debt-to-GSDP ratio rose from 39.09 per cent in 2019-20 to 43.98 per cent in 2023-24, while overall debt and liabilities stood at Rs 95,633 crore by March 2024.
Borrowing far outpaced limits: the state’s loan limit for 2023-24 was Rs 6,342 crore, yet it borrowed Rs 9,043 crore. Most borrowing was used not for development or investments but to meet existing obligations. Pension and interest payments consume growing shares of the budget. The state’s return to the Old Pension Scheme (OPS) in April 2023 has increased pension liabilities significantly, adding Rs 771.98 crore under the category of “Pensions and Other Retirement Benefits” in 2023-24, a media report stated.
Experts suggested what is needed: strengthen vocational education, tie curricula with industry, build digital infrastructure, provide capital and market linkages for agri-processing and artisan clusters, enhance remote work options, and support MSMEs and startups. Sharma stated that education that is connected to the skill-based needs of industry can unlock the potential of youth in the economy. Shah urged to empower women and rural youth with targeted funding and mentorship. Himachal has already proven its discipline, literacy and capability.
Himachal Pradesh stands today at a crossroads. Its 100 per cent literacy remains a feather in its cap. Yet, structural unemployment, limited industrial diversification, dependency on seasonal sectors, rising debt, and repeated monsoon destruction are dimming prospects for many of its educated youth. Only if these steps are urgently taken will literacy translate into opportunity, ensuring Himachal’s young population does not merely know how to read and write, but also how to build lives, livelihoods, and resilience in their own hills. |
