The proportion of economically active population (15 - 59 years) has increased from 57. 7 percent to 63. 3 percent during the 1991 - 2013 period, the Economic Survey for 2015 - 16 said on Friday.
The employment growth in the organised sector (public and private combined) increased by 2 percent in 2012 over 2011, while it increased by only 1 percent in 2011 over 2010, said the survey tabled in parliament by Finance Minister Arun Jaitley.
These figures were based on the Sample Registration System data for 2013.
"The annual growth rate of employment for the private sector was 4. 5 percent in 2012 over 2011 whereas the public sector registered a marginal growth of 0. 4 percent in the same year, " the survey added.
The Fourth Annual Employment - Unemployment Survey conducted by the Labour Bureau during the period January 2014 to July 2014 has shown that the Labour Force Participation Rate (LFPR) is 52. 5 percent for all persons.
The survey stated that to leverage the benefit "demographic dividend" it is important to increase investment in human capital to improve productivity of the population.
The Gender Parity Index (2013 - 14 provisional) however, shows an improvement in girls' education, with parity having been achieved between girls and boys at almost all levels of education.
"On the education front, the declining educational outcomes reflected in lower reading levels in both public and private sector schools are areas of concern, " the survey said.
The survey said India being in the midway through its demographic dividend is providing an economic growth in terms of the working age share of the population.
"Hence to exploit this dividend and meet the growing aspiration of those entering the labour force, India's economy needs to create enough "good jobs" - jobs that are safe and pay well, and encourage firms and workers to improve skills and productivity, " it said.
Out of the 10. 5 million new jobs creative between 1989 and 2010, only 3. 7 million - about 35 percent - were in the formal sector. In this period total establishments were increased by 4. 2 million.
The survey stated that jobs in informal sector have come down possibly due to increased use of contract labour.
"Thus, the challenge of creating the good jobs of India could be seen as a challenge of creating more formal sector jobs which also guarantee workers protection. "
Recent studies have estimated that India's GDP would grow by an additional 1. 4 percent every year if women were to participate as much as men in the economy.
"To boost economy the centre has to ensure that labour regulation is worker - centric, by expanding workers choice and reducing mandatory taxes on formal sector employment, " the survey said.
The survey has also suggested to improve the function of Employees Provident Fund Organisation.