Abstract
The Indian economy is currently passing through a critical phase of economic development as its structural transformation in employment has stalled, whilst both the youth unemployment rate and the number of youths "Not in Employment, Education, and Training (NEET)" have increased to an unprecedentedly high level. In the context in which the share of the youth population is continuing to rise despite the declining fertility rate to below the replacement rate, increased educated youth unemployment has caused an upsurge in the Discouraged Labour Force (DLF). This paper explores the trends, composition, and determinants of rising DLF in India using national level employment-unemployment surveys and macro-level panel data. Based on Multinomial logit and System GMM regression results, it is argued that policies aiming to enhance human capabilities through an improved base of technical education and the promotion of industry are necessary to enhance the growth of quality jobs in order to combat the problem of rising educated youth unemployment and DLF. Moreover, these measures could help in the process of harnessing the demographic dividend in India through an increased level of labour productivity in the long run.