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With 367 million young people aged 15–29, India has the world’s largest youth population. This demographic scale has long fed expectations of a dividend: a large working-age population, better educated than earlier generations, that can drive faster economic growth. Yet recent data on young people’s transition from education to work presents an uncomfortable counterpoint. In 2025, roughly 87 million young Indians, one in four, were not in employment, education or training (NEET).
While the aggregate figure is troubling, its gender dimension is even more consequential. The latest comparable gender analysis, published by the International Labour Organization (ILO) and the Institute for Human Development using 2022 data, found that young women were five times more likely than young men to be NEET. The National Institution for Transforming India (NITI Aayog) estimates that only 3 percent of women are in formal employment, while 71 percent are either employed informally or belong to the NEET cohort. Female NEET rates are also high in both rural and urban India, at 49 percent and 47 percent, respectively. India’s NEET challenge is therefore deeply gendered, raising a structural question: what happens to the country’s human capital when large numbers of young women leave education without entering training or paid work?
The Missing Link Between Education and Work
A demographic dividend does not arise automatically from a large young population; it depends on the skills, opportunities and contributions that population can bring to the economy.
India has made substantial progress in expanding young women’s access to education. Gender parity in primary school enrolment was achieved more than a decade ago and has been maintained since. More recent UDISE+ releases continue to show parity or a slight female advantage at several levels of school education. Girls also have higher transition rates than boys from primary through higher secondary, and recent completion data show them matching or outperforming boys. The gender gap now increasingly lies at the next transition: converting years of investment in girls’ schooling into further skill building and economic participation.
A demographic dividend does not arise automatically from a large young population; it depends on the skills, opportunities and contributions that population can bring to the economy.
Female and male NEET populations also differ sharply in composition. Young men who are NEET are much more likely to remain connected to the labour market through job search, while young women’s exclusion is closely linked to the unequal distribution of household labour: about 88 percent of NEET young women are engaged in unpaid domestic and care work.
Participation Alone Is Not Enough
The geography of women’s economic participation is also strikingly uneven. The National Statistics Office’s (NSO) first district-level estimates under the revamped Periodic Labour Force Survey (PLFS), published in September 2026, show that among the ten most populous districts in each state, the female labour-force participation rate ranged from 80.9 percent in Hamirpur, Himachal Pradesh, to just 18.9 percent in East Delhi. Higher female participation does not necessarily mean that women’s capabilities are being converted into high-quality or formal employment. In many districts, women’s work is concentrated in self-employment, agriculture and the unincorporated economy.
The problem is therefore not an absence of activity. Women’s unpaid care and informal work have substantial economic and social value. The concern is that these forms of work often allow women to realise only a fraction of the returns to their accumulated human capital: they offer fewer opportunities to build recognised skills, acquire formal work experience, raise earnings, develop professional networks or gain social-security protection. Accordingly, even when women are economically active, the quality and productivity of that work matter. For a country investing heavily in girls’ education and skills, the challenge is therefore not only to increase female participation, but to ensure that women can convert their human capital into productive, remunerative and progressively better-quality work.
The Compounding Cost of Lost Human Capital
The failure to fully translate female human capital into economic gains has costs at both the individual and economic levels. The ILO has warned that NEET status can become persistent: being NEET today increases the likelihood of remaining NEET later, particularly for young women. Beyond the immediate loss of earnings, a young woman may also miss out on workplace learning, opportunities to update her skills, occupational experience and professional networks that influence her ability to re-enter education or employment.
The World Bank estimates that raising India’s female labour-force participation to around 50 percent could add about one percentage point to annual gross domestic product (GDP) growth. This would be a significant contribution in a country that needs growth of roughly 8 percent a year to reach high-income status by 2047. NITI Aayog’s 2026 work makes the same connection to Viksit Bharat: it argues that India must realise a ‘gender dividend’ alongside its demographic dividend, and cites earlier International Monetary Fund (IMF) estimates that removing barriers to women’s labour-force participation could raise economic output by about 12 percent. It also notes that greater female participation in manufacturing alone could raise output by around 9 percent. The issue, however, is not participation alone. NITI Aayog’s macroeconomic work stresses that women remain disproportionately concentrated in lower-productivity segments of the economy and that urban female participation remains weak across education levels.
For India, the loss of human capital therefore operates at two levels: when educated women do not enter or remain in the workforce, and when those who do participate are unable to translate their education and skills into sufficiently productive, remunerative and secure work. Closing this gap is central not only to gender equity but also to the growth arithmetic of Viksit Bharat.
A meaningful human-capital pathway runs from education through training and into sustained economic participation. The policy priority, therefore, should be to protect continuity, not just participation.
Three Shifts for the Next Phase
A meaningful human-capital pathway runs from education through training and into sustained economic participation. The policy priority, therefore, should be to protect continuity, not just participation.
The policy objective should not be merely to raise female labour-force participation at a point in time. It should be to maintain a continuous connection to education, training or work across the life course. First, a woman who leaves paid work for caregiving should not disappear from the skills system. She should remain connected through refresher modules, alumni networks, job alerts, micro-credentials, apprenticeships and re-entry pathways. The relevant outcome is not simply whether she is working today, but whether she remains connected to a pathway back.
Second, policies are organised around institutions, but women often fall through the gaps between them, particularly at key transitions such as completing Class 10 or 12, graduating, marrying, giving birth or leaving an early job. These transition points should become explicit policy objects. Districts could track where female participation drops most sharply and intervene, rather than treating all young women as one category. A young woman’s first job should not determine the return on her entire education. Policies must also maximise the number of credible next steps a woman can take: further study, lateral movement, an apprenticeship, migration, remote work, entrepreneurship or re-entry after a break. Structured re-entry pathways, such as refresher courses, skills assessments, counselling and employer linkages, can help women resume their careers where they left off, rather than being penalised for spending three years outside paid work. The goal is to create option value around women’s human capital and support better engagement.
India has spent decades building female human capital through education. The challenge for the coming decade is to prevent that capital from disconnecting or depreciating during the transition to work.
Third, there is a need to measure human-capital conversion, not just participation. In addition to measuring whether young people are enrolled, trained, employed or NEET, we should also measure how effectively education and skills are converted into productive work. This means assessing whether trained women enter occupations that use their capabilities, whether earnings and job quality improve, whether they remain in work, and whether they can re-enter after interruptions. A low NEET rate can coexist with substantial under-use of human capital if women are concentrated in low-productivity, poorly paid or poorly matched work.
India has spent decades building female human capital through education. The challenge for the coming decade is to prevent that capital from disconnecting or depreciating during the transition to work. Moreover, this gender dividend will not be realised simply by getting more women into work. It will depend on keeping women connected to pathways where their capabilities can be used effectively, enhanced and rewarded throughout their working lives.
Arpan Tulsyan is a Senior Fellow with the Centre for New Economic Diplomacy at the Observer Research Foundation.
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