India’s public-sector employment crisis deepens as recruitment delays and contractual hiring rise

Despite mounting demand, India faces a shrinking and inefficient public-sector workforce, with lengthy recruitment processes and a shift toward contractual jobs undermining long-term staffing stability, as government vacancies remain high.

India’s hunger for secure public-sector work remains intense, but the number of such jobs is thinning and the recruitment pipeline is slow enough to turn many applicants away. Business Today reported that student protests in Jharkhand and earlier agitation in other states reflect mounting anger over hiring delays, with some state recruitment boards taking three to four years to finish a single cycle, by which time candidates can age out of eligibility.

Economist Jean Dreze told Business Today that India still needs more public jobs, not fewer, arguing against the idea that the state is already overstaffed. He pointed to Jharkhand, where 40% of government primary schools reportedly function with only one teacher, as an example of how shortages run deep across public services. The same report said governments often avoid expanding permanent staff because pay commission awards and pensions push up the wage bill, making contractual hiring more attractive.

The scale of that shift is visible in the numbers. Former Jawaharlal Nehru University professor Santosh Mehrotra estimated India’s workforce at about 610 million in 2024, while total government employment, excluding defence, stood at roughly 25 million, or only about 4% of jobs. On the central government side, the Finance Ministry’s annual report on pay and allowances showed sanctioned posts falling every year for five years until March 2024, dropping from 4,077,687 in 2020 to 4,003,140 by March 2024.

Vacancies have also remained stubbornly high. By March 2024, the Finance Ministry said nearly 8.5 lakh central government posts were unfilled, leaving about one in five sanctioned posts vacant. The report showed the vacancy rate had eased to 21.1% in 2024 from 24.2% the year before, but the broader picture still pointed to a state that is shrinking in headcount while struggling to fill the positions it keeps on the books.

The biggest central employers remain the Railways and the Home Ministry, which together account for three in four jobs within the central government, according to Business Today’s review of official data. Group C posts make up the bulk of the sanctioned workforce, but almost 20% were vacant in 2024. Group B vacancies were even higher, at about 30%, underscoring how shortages affect both clerical work and middle-management roles.

Mehrotra said the long-term answer depends on fiscal capacity. He argued that richer countries tend to have larger states and that India’s tax-to-GDP ratio has stayed stuck at roughly 17% to 17.5% for decades, limiting room for more permanent hiring. In practice, the government has increasingly relied on outsourcing, with the Government e-Marketplace, launched in 2016, now used for manpower procurement as well as goods and services. Business Today said more than a million people were hired through GeM in FY25, even as regular posts continued to go unfilled.

That preference for flexibility is also apparent in the rise of contract labour. Business Today reported that pay and allowances spending for central government employees rose from Rs 1.40 lakh crore in 2014-15 to Rs 2.96 lakh crore in 2023-24, with the sharpest jump after the Seventh Pay Commission took effect in 2016-17. The Labour Ministry has not disclosed recent five-year counts for contractual staff in response to Parliament, but it did say such workers are hired according to operational needs. In earlier data cited by the report, contractual employees in the central sphere more than doubled between 2019 and September 2022, while the share of casual and contract workers across central public sector enterprises rose to nearly half by FY26.