Every year, the Economic Survey precedes the Union Budget, shaping how economic challenges are diagnosed and how policy responses are framed. The Economic Survey and the Union Budget are meant to work in tandem: the former diagnoses the economy’s key challenges, while the latter responds with policy. A major talking point of The Economic Survey 2025–26 is its projection of India’s potential growth rate at 7%, revised upward from 6.5%. Within this broader assessment, Chapter 12 of the Survey, “Employment and Skill Development: Getting Skilling Right”, outlines the government’s understanding of labour market challenges.There are some important issues highlighted in this chapter, related to the problem of employment and what the current government has undertaken to address these problems. The chapter repeatedly frames employment problems around employability, skilling, and deregulation. The primary problem is thus framed in a manner that although there are jobs in the country, people are not receiving their due employment because of a mismatch between the requisite skills and their skills.The Union Budget reflects this perspective. The allocation to the Ministry of Skill Development and Entrepreneurship has been increased sharply, by around 62% compared to the previous year’s Budget Estimates. Measures such as the establishment of university townships near industrial and logistics corridors, the proposal to create a girls’ hostel in every district to encourage participation in STEM education, and the formation of a high-powered Education to Employment and Enterprise Standing Committee focusing on the services sector signal a renewed commitment to education and skilling. These initiatives are important and can improve access, enhance workforce preparedness and expand opportunities, particularly for women.Employment outcomes depend not only on the supply of skilled workers but also on the pace and pattern of job creation. Education and skilling policies primarily influence labour supply. Whether these translate into better employment outcomes will hinge on the ability of the economy to generate sufficient demand for labour across sectors.Despite rising education levels and repeated deregulation, the economy has failed to generate sufficient numbers of stable, well-paid jobs. Manufacturing growth has been weakly employment-intensive, services growth has favoured a narrow segment of skilled workers, and informalisation has spread even within the formal sector. The persistence of high youth unemployment and stagnant wages points to a deeper constraint: weak labour demand. Without a strategy that directly expands job-creating demand, supply-side reforms alone are unlikely to resolve India’s employment crisis. Therefore, while there is a focus on the supply side problem of the labour market, the demand side is ignored.The lack of labour demand in India has been highlighted by scholars. Mehrotra & Parida (2021) show that rising open unemployment is attributable to stalled structural transformation owing to lack of effective demand for (especially skilled) workers in non‑farm sectors, with mechanisation in agriculture, slowdown in construction, and weak domestic and export demand depressing job creation. This essentially points at the phenomenon of insufficient creation of jobs, and thus a depressed job demand.Thomas (2023) finds that labour demand in industry, construction and services has lagged well behind the potential labour supply, especially after 2012, producing high unemployment among young men and withdrawal of women from the labour force. The Indian Economy has shown a consistently low job creation rate. Padhi, Rao & Triveni (2023) analyse four decades of data and find that after 2004-05 India entered a distinct phase of “lack of job creation” despite strong growth, with agriculture still dominating employment and low employment elasticities in non‑farm sectors. There is significant literature which has found out that there is a low growth–employment elasticity.Regular salaried employment, a useful proxy for relatively stable work, continues to account for less than a quarter of total employment. A large share of the workforce remains in self-employment or casual work, often characterised by low earnings and limited security. Manufacturing, while contributing a significant share of GDP, absorbs a disproportionately small share of labour, that reflects low employment elasticities. These patterns point to limitations in job creation rather than a simple shortage of skills.The Survey reiterates the view that rigid labour laws have constrained job creation and presents recent labour law reforms as a remedy. However, the empirical evidence on the employment effects of labour market flexibility in India remains mixed, with some studies finding limited gains in employment growth, and lower employment elasticities in more flexible states. In an economy marked by weak job creation and high informality, further deregulation risks increasing precarity without addressing the underlying shortage of jobs. In a situation where the key challenge is to create enough decent jobs, we should focus on policies to boost labour demand, not primarily dismantling job security.Indeed studies have also shown that there is a qualitative mismatch between the labour that is supplied and the labour that is demanded. Schneider & Pilz (2024) show that both high and low‑skilled youth face unemployment. These are connected to larger structural and institutional problems, rather than purely to individual skill deficits However, whitewashing the labour demand part of the story can lead us to some erroneous conclusions. The requirement of job creation is immediate and necessary. Looking past the aspect of labour demand absolves the state of responsibilities related to employment creation.The Union Budget should have prioritised development expenditure which is employment creating in nature. As Rohit Azad and Indranil Chowdhury highlight, capital expenditure in agriculture, health or education can potentially create jobs and boost demand. There is a requirement for investing in labour intensive sectors to address the demand side of the problem. The biggest employment guarantee programme in India, Mahatama Gandhi National Rural Employment Guarantee Act (MGNREGA), has been disbanded for a new scheme. Scholars are sceptical as this would defeat the idea of an employment guarantee exacerbating the unemployment problem in the country. Supply side fixes would work only when they are complemented by demand side solutions.Satyaki Dasgupta is an Assistant Professor at Christ University, Bangalore. Basit Abdullah is an Assistant Professor at Institute of Management Technology, Hyderabad.