In this essay we will discuss about Unemployment in India. After reading this essay you will learn about: 1. Meaning of Unemployment in India 2. Nature of Unemployment Problem in India 3. Extent 4. Causes 5. Remedial Measures 6. Characteristics 7. Employment Policy and Schemes 8. Growth of Employment and Others.
Unemployment in India Content:
- Meaning of Unemployment in India
- Nature of Unemployment Problem in India
- Extent of Unemployment
- Causes of Unemployment Problem in India
- Remedial Measures to Solve Unemployment Problem in India
- Characteristics of Employment Problem Followed in India – Its Critical Evaluation
- Employment Policy and Schemes in India
- Growth of Employment in India in Recent Years
- Is the New Economic Policy promoting Jobless Growth ?
- Global Economic Recession and its Impact on Unemployment Problem in India
Essay # 1. Meaning of Unemployment in India:
Unemployment is a common economic malady faced by each and every country of the world, irrespective of their economic system and the level of development achieved. But the nature of unemployment prevailing in underdeveloped or developing countries sharply differs to that of developed countries of the world.
While the developed countries are facing unemployment, mostly of Keynesian involuntary and frictional types but the underdeveloped or developing countries like India are facing structural unemployment arising from high rate of growth of population and slow economic growth.
Structural unemployment may be open or disguised type. But the most serious type of unemployment from which those undeveloped countries like India are suffering includes its huge underemployment or disguised unemployment in the rural sector.
Unemployment is a serious problem. It indicates a situation where the total number of job vacancies is much less than the total number of job seekers in the country. It is a kind of situation where the unemployed persons do not find any meaningful or gainful job in-spite of having willingness and capacity to work. Thus unemployment leads to a huge wastage of manpower resources.
India is one of those ill-fated underdeveloped countries which is suffering from a huge unemployment problem. But the unemployment problem in India is not the result of deficiency of effective demand in Keynesian term but a product of shortage of capital equipment’s and other complementary resources accompanied by high rate of growth of population.
Essay # 2. Nature of Unemployment Problem in India:
Present unemployment problem in India is mostly structural in nature.
Unemployment problem of the country can now be broadly classified into:
(a) Rural unemployment and
(b) Urban unemployment.
(a) Rural Unemployment:
In India the incidence of unemployment is more pronounced in the rural areas.
Rural unemployment is again of two types:
(i) Seasonal unemployment and
(ii) Disguised or perennial unemployment.
(i) Seasonal Unemployment:
Agriculture, though a principal occupation in the rural areas of the country, is seasonal in nature. It cannot provide work to the rural population of the country throughout the year. In the absence of multiple cropping system and subsidiary occupation in the rural areas, a large number of rural population has to sit idle 5 to 7-months in a year.
Seasonal Unemployment is also prevalent in some agro- based industries viz., Tea Industry, Jute Mills, Sugar Mills, Oil Pressing Mills, Paddy Husking Mills etc.
(ii) Disguised or Perennial Unemployment:
Indian agriculture is also suffering from disguised or perennial unemployment due to excessive pressure of population. In disguised unemployment apparently it seems that everyone is employed but in reality sufficient full time work is not available for all.
In India, about 72 per cent of the working population is engaged in agriculture and allied activities. In 1951 more than 100 million persons were engaged in the agricultural and allied activities whereas in 1991 about 160 million persons are found engaged in the same sector resulting in as many as 60 million surplus population who are left with virtually no work in agriculture and allied activities.
(b) Urban Unemployment:
Urban unemployment has two aspects:
(i) Industrial unemployment and
(ii) Educated or middle class unemployment.
(i) Industrial Unemployment:
In the urban areas of the country, industrial unemployment is gradually becoming acute. With the increase in the size of urban population and with the exodus of population in large number from rural to the urban industrial areas to seek employment, industrialization because of slow growth could not provide sufficient employment opportunities to the growing number of urban population.
Thus the rate of growth of employment in the industrial sector could not keep pace with the growth of urban industrial workers leading to a huge industrial unemployment in the country.
(ii) Educated or middle-class Unemployment:
Another distinct type of unemployment which is mostly common in almost all the urban areas of the country is known as educated unemployment. This problem is very much acute among the middle class people. With rapid expansion of general education in the country the number of out-turn of educated people is increasing day by day.
But due to slow growth of technical and vocational educational facilities, a huge number of manpower is unnecessarily diverted towards general education leading to a peculiar educated unemployment problem in the country. The total number of educated unemployment increased from 5.9 lakh in 1962 to 230.50 lakh in 1994.
Essay # 3. Extent of Unemployment:
In view of the growing problem of unemployment and under-employment prevailing in the country it is very difficult to make an estimate of the total number of unemployment in a country like India. As per the statement of the then Labour and Employment Minister in the Parliament, there was about 35 million unemployed person’s in-spite of 42.5 million new jobs created during 1951 and 1969.
Various agencies like Planning Commission, CSO, NSS etc. could not provide any dependable estimate about the magnitude of unemployment in India. As per the estimates of unemployment made in the Five Year Plan the backlog of unemployment which was 5.3 million at the end of First Plan gradually increased to 7.1 million, 9.6 million and then to 23 million at the end of Second, Third and Three Annual Plans respectively.
The number of unemployed as percentage of total labour force which was 2.9 per cent at the end of the First Plan gradually increased to 9.6 per cent at the end of Annual Plans in 1969.
The Committee of Experts on Unemployment under the Chairmanship of Mr. B. Bhagawati observed in its report (1973) that total number of unemployed in 1971 was 18.7 million out of which 16.1 million unemployed were in rural areas and the rest 2.6 million existed in urban areas. Moreover, unemployment as percentage of total labour force was to the extent of 10.9 per cent in 1971 for the whole country.
As per the Employment data, the number of registered job seekers in India rose from 18.33 lakh in 1961 to 165.8 lakh in 1981 and then to 370.0 lakh at the end of March 1994. Total number of educated job seekers has also increased from 5.90 lakh in 1961 to 230.0 lakh in the end of March 1994, which constituted nearly 62 per cent of the total job seekers of the country.
At the end of January 1996, total number of registered job seekers in India was 368.9 lakh. As on 1st April, 1997, total number of unemployed persons in India was 7.5 million. The International Labour Organisation (ILO) report World Employment 1995 observed that 22 per cent of all male workers in India are underemployed or unemployed and the figure is rising.
The employment in the modern sector in India grew only by 1,6 per cent per annum in 1980s, Underemployment in the rural areas also remained high.
The National Sample Survey Organisation (NSSO) developed three concepts of unemployment since 1972-73.
(i) Usual Status Unemployment,
(ii) Weekly Status Unemployment and
(iii) Daily Status Unemployment.
The magnitude to usual status unemployment (chronic unemployment) rose from 1.4 million in 1961 to 7.1 million in 1978.
The Planning Commission’s estimates of usual unemployment revealed that the usual status unemployment at the age-group 5+ increased from 12.02 million in 1980 to 13.89 million in March, 1985. The total employment at the beginning of 1992-93 was estimated to be 301.7 million on a “weekly status” basis, and the labour force was estimated to be 319 million.
Again as per the NSS tentative estimates of unemployment for April 1990, the usual status and daily status unemployment were 3.77 per cent and 6.09 per cent respectively of the total work force in 1987-88. By adjusting these estimates, Arun Ghosh estimated the backlog of unemployment in April 1990 as—13 million of usual status and 20 million of daily status.
At the end of each Five Year Plan, the backlog of unemployment in India has been increasing as the volume of employment generated cannot match this additional number of labour included in work force. As per document of the Sixth Plan (1980-85), total number of unemployed was 20.7 million in 1980 which represents 7.74 per cent of the total labour force.
Ninth Plan (1997-2002) estimated the total backlog of unemployment as 36.8 million in 1996. Thus a huge portion of our national resources has been constantly used for the generation of employment opportunities so as to clear the backlog of unemployment arising from rapidly rising population.
By looking at a different angle, it is found that India’s population presently stands at 104 crore and increasing by nearly 1.6 crore per year. It is generally estimated that nearly 50 per cent of the total population of the country requires employment although in many countries like China, Thailand etc. 55 per cent of total population is normally employed.
So, taking the employment ratio of 50 per cent, the employment requirement of India is 52 crore which is again increasing by nearly 80 lakh per annum as the population is growing by 1.6 crore annually. As per official estimate, total employment in the country was 41 crore in 1999-2000 and it grew by at the rate of 41 lakh annually, during the period 1994-2000.
This official employment figure is somewhat inflated as it included disguised unemployment existing in rural areas of the country. But the level of unemployment existing at present is around 10 crore and that unemployment figure is again increasing by nearly 40 lakh per year due to our increasing size of population.
In view of the centrality of the employment objective in the overall process of socio-economic development as also to ensure availability of work opportunities in sufficient numbers, a special group on targeting ten million employment per year over the Tenth Plan period was constituted by Planning Commission under the Chairmanship of Dr. S.P. Gupta, Member, Planning Commission.
Considering the need for generating employment opportunities which are gainful, the Special Group has recommended the use of Current Daily Status (CDS) for measuring employment, as this measure of employment is net of the varying degrees of underemployment experienced by those who are otherwise classified employed on usual status basis.
The Special Group has made following estimate of employment and unemployment in India on current daily status (CDS) basis.
Table 12.4 reveals that the Export Group estimates has shown a decline in the rate of growth of population (from 2.0 to 1.95 per cent), labour force (from 2.43 to 1.31 per cent) and work force (from 2.70 to 1.07 per cent) during the period 1983-94 to 1994-2000.
But unemployment rate in the country during the period 1993-94 to 1999-2000 increased from 5.99 per cent to 7.32 per cent although the overall growth performance of the economy has been better in recent times than the previous decade (1983-94).
During the same period, the unemployment rate in rural areas of the country increased from 5.61 per cent to 7.21 per cent and the same unemployment rate in urban areas of the country also increased from 7.19 per cent to 7.65 per cent.
Total number of unemployed also increased from 20.13 million in 1993-94 to 26.58 million in 1999- 2000 out of which the rural and urban number of unemployed stood at 19.50 million and 7.11 million respectively in 1999-2000.
Finally, as per the data available from 939 employment exchanges in the country, the number of job seekers registered with employment exchanges as on September, 2002 (all of whom are not necessarily unemployed) was of the order of 4.16 crore out of which approximately 70 per cent are educated (up to 10th standard and above).
The number of women job seekers registered was of the order of 1.08 crore (26 per cent of the total job seekers). The maximum number of job seekers awaiting employment were in West Bengal (63.6 lakh), while the minimum were in the UT of Dadra & Nagar Haveli (0.06 lakh) and in the state of Arunachal Pradesh (0.2 lakh).
The placement was maximum in Gujarat whereas the registration was maximum in U.P. The placement effected by the employment exchanges at all India level during 2001 was of the order of 1.69 lakh as against 3.04 lakh vacancies notified during this period.
The National Sample Survey Organisation (NSSO), as per one of its recent surveys made in 2003 observed that the proportionate unemployment rate in India at present stands at 2.0 per cent of the total population and around 3.0 per cent of the total work force of the country.
Findings of NSS Survey 61st Round (2004-05):
The latest and seventh quinquennial NSSO, Survey, namely 61st round conducted during July 2004 to June 2005 constituted an important source of information on employment and unemployment. The 6ist round of NSSO survey revealed a faster increase in employment during 1999-2000 to 2004-05 as compared to 1993- 94 to 1999-2000. Table 12.5 has clarified the position in this regard.
It would now be better to look at the current estimates of employment and unemployment in the country made by Planning Commission. In the meantime, the Eleventh Five year Flan has largely used the Current Daily Status (CDS) basis of estimation of employment and unemployment in the country.
It has also been observed that the estimates based on daily status are the most inclusive rate of ‘unemployment’ giving the average level of unemployment on a day during the survey year.
It captures the unemployed days of the chronically unemployed, the unemployed days of usually employed who became intermittently unemployed during the reference week and unemployed days of those classified as employed according to the criterion of current weekly status. Table 12.5(a) shows the estimates of employment and unemployment on CDS basis.
Table 12.5(a) reveals the trend in respect of population as well as labour force and workforce since 1983 to 2004-05 and the resultant difference between these two figures also shows the number of unemployed in different periods. With the increase in the population of the country, the number of labour force is increasing faster than the number of work force resulting growing number of unemployment in the country.
In 1983, total number of labour force in India was 263.82 million, total number of work force was 239.49 million and the resultant number of unemployed was 24.33 million. In 2004-05, total labour force of the country was 419.65 million and total work force was 384.91 million and as a result total number of unemployed increased to 34.74 million in 2004-05.
However, the growth of labour force in per cent per annum increased from 2.28 per cent during the period 1983 to 1993-94 to 2.84 per cent during the period 1999-00 to 2004-05. But the growth of work force in per cent per annum increased from 2.61 per cent during the period 1983 to 1993-94 to 2.62 per cent during the period 1999-00 to 2004-05.
Moreover, the unemployment rate as a proportion of labour force decreased from 9.22 per cent in 1983 to 6.06 per cent in 1993-94 and then gradually increased to 8.28 per cent in 2004-05.
Estimates on employment and unemployment on CDS basis [Table 12.5(a)] indicate that employment growth during 1999-2000 to 2004-05 has accelerated significantly as compared to the growth witnessed during 1993-94 to 1999-2000. During 1999-2000 to 2004-05, about 47 million work opportunities were created compared to only 24 million in the period between 1993-94 and 1999-00.
Employment growth accelerated from 1.25 per cent per annum to 2.62 per cent per annum. However, since the labour force grew at a faster rate of 2.84 per cent than the workforce, unemployment rate also rose.
The incidence of unemployment on CDS basis increased from 7.31 per cent in 1999-00 to 8.28 per cent in 2004-05. It would also be better to look at the sectoral employment shares by current daily status in the country. Table 12.5(b) will clarify the position in this respect.
Table 12.5(b) reveals the sectoral employment shares of different sector of the country in recent years. The decline in overall growth of employment during 1993-94 to 1999-00 was largely due to the lower absorption in agriculture. The share of agriculture in total employment dropped from 61 per cent to 57 per cent.
This trend continued and the share of agriculture in total employment further dropped to 52 per cent in 2004-05.
While the manufacturing sector’s share increased marginally during this period, trade, hotel and restaurant sector contributed significantly higher to the overall employment than in earlier years. The other important sectors whose shares in employment have increased are transport, storage and communications apart from financial, insurance, real estate, business and community, social and personal services [Table 12.5.(b)].
Extent of Farm Unemployment:
A high degree of unemployment and underemployment prevails among the agricultural workers of the country. This farm or agricultural unemployment is prevailing in the form of seasonal unemployment, disguised unemployment and chronic and usual status unemployment.
To measure the extent of unemployment and underemployment is really a difficult task. As per the N.S.S. study the daily status rural unemployment rate in India was 5.25 per cent in 1987-88.
The Agricultural Labour Enquiry Committee Report (First and Second) revealed that in India agricultural labourers had 275 and 237 days of employment in 1950-61 and 1956-57 respectively. Considering the fall in the employment elasticity with reference to GDP for the agricultural sector during the 1970s and 1980s it can be guessed that the seasonal unemployment might have increased in recent years.
In respect of disguised unemployment various estimates have been made to determine the extent of surplus labour in India by Shakuntala Mehera, J.P. Bhattacharjee, Ashok Rudra, J.S. Uppal and others. Among these works, Shakuntala Mehera’s work was quite well known.
She estimated that the extent of surplus work force in agriculture was 17.1 per cent during 1960s. Again on the basis of 32nd Round of the NSS, the Usual status of rural unemployment in March 1985 was estimated at 7.8 million and such unemployment was highest in the age-group of 15-29.
Recently, a study to estimate the extent of farm unemployment was conducted by Lucknow based Centre of Advanced Development Research (CADR). The report submitted by this centre in September 1992 revealed that a very high degree of unemployment or under-employment prevails among the 160 million Indians engaged in agriculture, either as cultivators or labourers.
It is found that these rural people do not get even the minimum work opportunity of 270 days a year, the average being only 180 days. This indicates that only 100 million people are sufficient to carry out the entire agricultural operations, including those of animal husbandry. Thus as many as 60 million people are at present left with virtually no work in agriculture and allied activities.
The study also highlighted the inter-state variation in agricultural labour absorption capacity. Among all the states, only in four states—Punjab, Haryana, Himachal Pradesh and Kerala—-agriculture provides full work opportunities of 270 days of eight-hour duration to every worker.
But in states like Andhra Pradesh, Bihar and Tamil Nadu, employment in agriculture is available to less than 50 per cent of the workforce while Karnataka, Maharashtra and Uttar Pradesh too have inadequate labour absorption capacity in the rural areas.
The CADR estimated that the agricultural sector will be able to absorb only 120 million of the available 180 million people by the end of the present century provided the rate of labour replacement by mechanization is not accelerated.
The report revealed that most of the unemployed or underemployed people are concentrated in the states of Uttar Pradesh (104 lakh), Bihar (100 lakh), Andhra Pradesh (80 lakh) and Tamil Nadu (66 lakh).
Extent of Urban Unemployment:
In India urban unemployment has been recording a serious proportion from the very beginning. The estimates of urban unemployment were made by the Planning Commission, the Central Statistical Organisation (CSO), Ministry of Labour and Employment and some individual economists like W. Malenbaum, R.C. Bhardwaj at different times.
Although these estimates are not comparable due to differences in concepts adopted, but these estimates provide some idea about the quantum of urban unemployment.
These reports revealed that during the first decade of planning the quantum of urban unemployment increased from 2.5 million in 1951 to 4.5 million in 1961, i.e., about 11.4 to 15.5 per cent of the working population remained unemployed. Again the extent of urban unemployment increased to 6.5 million in 1985 (as per NSS 32nd Round) and the rate of urban unemployment was 9.7 per cent.
This urban unemployment is mostly of two types:
(a) Industrial unemployment and
(b) Educated unemployment.
In India due to growing industrial sickness in huge number of small scale industrial units and in some large scale units, the quantum of industrial unemployment has been increasing at an alarming rate. Moreover, the recent structural adjustments in industrial sector will also add a good number of unemployment to this category. However, the exact number of industrial unemployment in India is not available in the absence of proper data.
Educated unemployment in India which is contributing a significant portion of urban unemployment has been increasing at a very rapid scale. Total number of educated unemployment in India increased from 2.4 lakh in 1951 to 5.9 lakh in 1961 and then to 22.96 lakh in 1971.
Again the number of educated job seekers increased from 90.18 lakh in 1981 to 167.35 lakh in 1987 and then to 291.2 lakh in 2002 which constituted about 74 per cent of the total job seekers of the country.
Unemployment Rates by Level of Education:
NSSO data indicates that compared to 1993-94, unemployment rates for persons of higher education level has declined in rural areas both for males and females in 1999-2000 and it has further declined in 2004- 05 compared to 1999-2000.
Unemployment rate of graduate and above female population is much higher in rural areas than in urban areas which is indicative of lack of opportunities in rural India combined with lack of mobility of this population segment.
Sluggish Employment Growth in Recent Times:
In recent times, .there is a slump in the rate of growth of employment. An important cause of concern is the declaration in the annual compound growth rate (CAGR) of employment during 2004-05 to 2011-12 to 0.5 per cent from 2.8 per cent during 1999-2000 to 2004-05 as against CAGRs of 2.9 per cent and 0.4 per cent respectively in the labour force for the same periods. Table 12.5(c) will clarify this situation.
Table 12.5(c) reveals that as per the National Sample Survey Office (NSSO) data during 1999-2000 to 2004-05, employment on usual states (US) basis increased by 59.9 million persons from 398.0 million to 457.9 million as against the increase in labour force by 62.0 million persons from 407.0 million to 469.0 million.
After a period of slow progress during 2004-05 to 2009-10, employment generation picked up during 2009-10 to 2011-12, adding 13.9 million persons to the workforce, but not keeping pace with the increase in labour force (14.9 million persons) as shown in the table.
Again, based on current daily status (CDS), CAGR in employment was 1.2 per cent and 2.6 per cent against 2.8 per cent and 0.8 per cent in the labour force respectively for the same periods.
However, the country has been experiencing structural changes in its employment pattern in recent times. Thus for the first time, the share of primary sector in total employment of the country dipped below the half way mark as its share declined from 58.5 per cent in 2004-05 to 48.9 per cent in 2011-12.
But the employment in the secondary and tertiary sectors increased to 24.3 per cent and 26.8 per cent respectively in 2011-12 as compared to 18.1 per cent and 23.4 per cent respectively attained in 2004-05. Moreover, self-employment continues to dominate by attaining 52.2 per cent share in total employment in the year 2011-12. But what is critical is the significant share of workers are engaged in low income generating activities.
Moreover, there are other issues of concern such as poor employment growth in rural areas, especially among females. Though employment of rural males is slightly better than that of females, long term trends indicate a low and stagnant growth. Such trends call for diversification of livelihood in rural areas from agricultural to non-agricultural activities.
Besides, a major impediment to the pace of quality employment generation in India is the small share of manufacturing in total employment. However, the data available, from 68th round of NSSO (2011-12) indicates a revival in employment growth in manufacturing from 11 per cent in 2009-10 to 12.6 per cent in 2011-12.
Moreover, the usual status (US) unemployment rate is generally regarded as the measure of chronic open unemployment during the reference year while the current daily status (CDS) is considered as a comprehensive measure of unemployment, including both chronic and invisible unemployment. Thus, while chronic open unemployment rate in India hovers around a low 2 per cent, it is significant in absolute terms.
The number of unemployed people (under US) declined from 11.3 million during 2004-05 to 9.8 million in 2009-10 but again increased to 10.8 million in 2011.12. However, on the basis of CDS, the number of unemployed person days declined from 34.3 million in 2004-05 to 28.0 million in 2009-10 and further to 24.7 million in 2011- 12.
It is also observed [from Table 12.5(c)] that there has been a significant reduction in chronic and invisible unemployment from 8.2 per cent in 2004-05 to 5.6 per cent in 2011-12. Expert feels that despite only a marginal growth in employment between 2009-10 and 2011-12, the main reason for the decline in unemployment levels could be that an increasing proportion of the young population opts for education rather than participating in the labour market. This is reflected from the fact that there is a rise in enrolment growth in higher education from 4.9 million in 1990-91 to 29.6 million in 2012-13.
Salient Features of the Trend of Unemployment Rates in India in Recent Years:
Following are some of the salient features of the trend of unemployment rates in India:
i. The unemployment rate went up between 1993-94 to 2004. On the basis of the current daily status (Unemployed on an average in the reference week) during the reference period unemployment rate for males increased from 5.6 per cent to 9.0 per cent in rural areas and from 6.7 per cent to 8.1 per cent in urban areas.
ii. The unemployment rate for female increased from 5.6 per cent in 1993-94 to 9.4 per cent in 2004 in rural areas and from 10.5 per cent to 11.7 per cent in urban areas.
iii. Furthermore, it is found that unemployment rates on the basis of current daily status were much higher than those on the basis of usual status (unemployed on an average in the reference year) implying a high degree of intermittent unemployment. This could be mainly because of the absence of regular employment for many workers.
iv. Urban unemployment rates (current daily status) were higher than rural unemployment rates for both males and females in 1993-94. However, in 2004, rural unemployment rates for males were higher than that of urban males.
v. Unemployment rates varied sharply across states. States, where wages are higher than in higher growing ones because of strong bargain or social security provisions; such as high minimum wage, had high incidence of unemployment in general.
Essay # 4. Causes of Unemployment Problem in India:
Unemployment problem in India is the cumulative result of so many factors.
The broad causes of unemployment problem are as follows:
(i) Population Explosion:
The most fundamental cause of large scale unemployment in India is the high rate of population growth since the early 1950s and the consequent increase in its labour force. It was estimated that with the 2.5 per cent annual rate of population growth, nearly 4 million persons are added to the labour force every year. To provide gainful employment to such a big number is really a difficult task.
Indian economy continues to be underdeveloped even as a vast quantity of unutilized and under utilised natural resources are prevailing in the country. The scale and volume of economic activities are still small. The non-agricultural sector especially modern industrial sector which could generate huge number of employment, is growing very slowly.
During the pre-independence period also, Indian economy experienced a slow growth. British destroyed the indigenous small scale and cottage industries instead of expanding and modernising them. During the post- independence period also, the performance of the industrial sector has also been found far below the plan targets and needs.
Moreover, the slow rate of capital formation is also responsible for the hindrances in the path of realisation of growth potential in agriculture, industry and infrastructure sector. Thus this underdevelopment is largely responsible for slow expansion of employment opportunities.
(iii) Inadequate Employment Planning:
In the first phase economic planning in India, employment opportunities could not be increased adequately and little has been done to utilise the Nurksian variety of labour surplus existing in the rural areas. Moreover, weak manpower planning is also another serious gap in Indian planning.
Less effort has been made for balancing the manpower needs and supplies in various production sectors, indifferent regions of the country and also indifferent skills.
This has resulted to large imbalances in the sphere of educated and trained personnel like engineers, technicians, cost accountants, plain graduates and port graduates, administrators etc. Thus huge amount of resources used for developing manpower could not come into much help due to faulty manpower planning.
(iv) Slow Rate of Growth:
In India the rate of growth of the economy is very poor and even the actual growth rate lies far below the targeted rate. Thus the increased employment opportunities created under the successive plans could not keep pace with the additions to the labour force taking place in the country every year leading to a huge and larger backlog of unemployment at the end of each plan.
(v) Backwardness of the Agriculture:
Heavy pressure of population on land and the primitive methods of agricultural operations are responsible for colossal rural unemployment and underemployment in the country.
(vi) Insufficient Industrial Development:
Industrial development in the country is not at all sufficient. Rather the prospects of industrial development has never been completely realised. Due to dearth of capital, lack of proper technology, scarcity of industrial raw materials, shortage of electricity and lack of labour intensive investment industrial sector could not gain its momentum and also could not generate sufficient employment opportunities in the country.
(vii) Prevailing Education System:
The prevailing education system in India is full of defects as it fails to make any provision for imparting technical and vocational education. Huge number of matriculates, undergraduates and graduates are coming out every year leading to a increasing gap between job opportunities and job seekers among the educated middle class.
In the absence of vocational education and professional guidance, these huge number of educated youths cannot avail the scope of self-employment leading to growing frustration and discontent among the educated youths.
(viii) Slow Growth of Employment during Economic Reforms:
Finally, the current phase of economic reforms introduced in India has resulted jobless growth to some extent. Economic Reforms has resulted large scale retrenchment of surplus workers in different industries and administrative departments due to down-sizing of workers.
The annual growth rate of employment which was 2.40 per cent during the period 1983- 94, but the same rate declined to a mere 0.98 per cent during the period 1994-2000. As a result, the unemployment growth rates increased from 5.99 per cent in 1993-94 to 7.32 per cent in 1999-2000.
Essay # 5. Remedial Measures to Solve Unemployment Problem In India:
Unemployment problem is a serious problem faced by a large populous country like India. Thus it is quite appropriate to suggest some measures to solve this problem. In order to suggest appropriate measures to solve this problem, it is better to identify some measures separately for the problem of rural unemployment and urban unemployment.
A. Remedies to Rural Unemployment Problem:
As the nature of rural unemployment is quite different, it is better to suggest some special measures to solve this problem.
Following are some of these measures:
(i) Expanding Volume of Rural Works:
One of the most important remedial measures to solve the problem of unemployment is to expand the opportunities for work especially in rural areas. In order to clear the backlog of unemployment and also to provide jobs to additional labor force joining the mainstream workers, this expansion in the volume of works needs to be done rapidly and that too in the areas of both wage employment and self-employment.
As large scale industries cannot provide adequate employment opportunities thus more importance be given to the development of agriculture and the allied sector along with development of small scale and cottage industries and also the unorganised informal sector and the services sector.
(ii) Modernisation of Agriculture:
In order to eradicate the problem of rural unemployment, the agricultural sector of the country is to be modernized in almost all the states. This would derive considerable agricultural surplus which would ultimately boost the rural economy and also expand employment opportunities in the rural areas. Attempts should also be made for wasteland development and diversification of agricultural activities.
(iii) Development of Allied Sector:
The problem of rural unemployment can be tackled adequately by developing allied sector which includes activities like dairy farming, poultry farming, bee keeping, fishery, horticulture, sericulture, agro processing etc. which are having a huge potential for the generation of employment and self-employment opportunities in the rural areas of the country.
(iv) Development of Rural Non-Farm Activities:
In order to generate employment opportunities in the rural areas, development of rural non-farm activities, viz., rural industries, the decentralised and cottage small scale sector of industry, agro-based industry, rural informal sector and the services sector, expansion of rural infrastructure, housing, health and educational services in the rural areas etc. should be undertaken throughout the country with active government support. Since Eighth Plan, the Government is following this strategy for the generation of rural employment.
(v) Appropriate mix of Production Techniques:
Although Mahalanobis strategy of development argued in favour of capital intensive techniques but in order to tackle the problem of rural unemployment the government should adopt a appropriate mix of production techniques where both the labour intensive and capital intensive methods, of production should be adopted selectively in the new fields of production so as to attain both growth in employment along with its efficiency.
(vi) Rural Development Schemes:
In order to eradicate the problem of rural unemployment, the Central as well as the State Governments should work seriously for introducing and implementing rural development schemes so that the benefit of such development could reach the target groups of people in time.
In order to reduce the extent of the problem of rural unemployment it would be quite important to spread the location of industries around the small towns on the basis of local endowment position so that migration of people from rural to urban areas can be checked.
(viii) Extension of Social Services:
It is also important to extend the social services in the rural areas in the sphere of education, medical science and in other areas which will go a long way for the empowerment of the rural people in general. Such a situation will indirectly motivate the people towards self-employment.
(ix) Population Control:
Adequate stress should be laid on the control of growth of population through family welfare programmes especially in the rural and backward areas of the country. This would be conducive for solving the growing problem of rural unemployment of the country as a whole.
(x) SHGs and Micro Finance:
Adequate steps be taken for promoting self help groups (SHGs) for generating self employment opportunities. In this respect, micro finance flow through NGOs towards SHGs can play a responsible role in solving the problem of rural unemployment.
B. Remedies to Urban Unemployment Problem:
In order to solve the problem of urban unemployment the country should follow certain important measures.
Following are some of these measures:
(i) Rapid Development of Industries:
In order to solve the problem of urban unemployment, immediate steps must be taken for enhancing the industrial efficiency. In this regard, immediate attempts must be made for expansion and modernisation of existing industries in cost-effective manner and also for setting up of new industries.
Some basic and heavy industries which were already established in the field of iron and steel, chemicals, defence goods, heavy machineries, power generation, atomic energy etc. should be modernized and more such new industries should also set up in the new and existing fields for generating huge number of employment opportunities for the present and coming generations.
More new resource based and demand based industries should be set up for generating employment opportunities.
(ii) Revamping Education System:
Indian education system still largely remains very much backward and fails to meet the demand for present industries and administrative set up. Instead of giving too much stress on general education, stress should be laid on vocationalisation of education which would help the younger generation to involve themselves in small scale and cottage industries and also in the services sector.
(iii) Motivation for Self-Employment:
In order to change the mindset of younger generation, especially from urban areas, attempts must be made by both government and non-government agencies for motivating the young people to accept the path of self-employment in the contest of squeezing scope of employment through carrier counseling at the institutional level.
(iv) Development of SSIs:
Considering the huge number of unemployed, it is quite important to develop a good number of small scale and cottage industries by adopting labour-intensive approach. Developing such S.S.Is for the production of need-based products would help a lot for generating huge employment opportunities in urban and semi-urban areas.
(v) Development of Urban Informal Sector:
As a good number urban people are engaged in urban informal sector, thus adequate steps must be taken for the improvement and modernisation of this informal sector so as to expand the sector further and also to generate more such employment opportunities for the growing number of urban unemployed person.
(vi) Revamping the Role of Employment Exchange:
In order to utilise the huge governmental set up of Employment Exchange throughout the country it is quite important to change the role of such exchanges for motivating and guiding the younger generations for self-employment in addition to its existing role for registration and placement.
(vii) Banking Support:
In order to solve the problem of urban unemployment, the scheduled commercial banks should come forward with rational proposals for the development of SSIs, various units in the services sector and also for the development of urban informal sector with a sympathetic attitude.
(viii) Works of National Interest:
In order to solve the problem of urban unemployment it is quite necessary to start the work of national interest which would generate adequate employment opportunities in the urban areas.
(ix) Changing Pattern of Investment:
Attempt should also be made to change the pattern of investment into a viable and productive one both from economic and social point of view so as to generate employment opportunities.
(x) Government Support:
In order to tackle the problem of urban unemployment, the government should come forward with viable urban employment generation schemes in the line of PMRY, NRY etc. to assist the urban unemployed for self-employment projects.
(xi) Growing Participation of FDI:
In order to tackle the problem of urban unemployment, the government should follow a suitable policy in the line of China for promoting the smooth flow of foreign direct investment (FDI) into our country for its growing participation in various important industrial and infrastructural projects.
C. General Remedies to Unemployment Problems:
(i) Special Employment Programmes:
In order to meet the gap between the requirement and the actual generation of employment opportunities, special employment programmes must be undertaken as an interim measure till the economy could reach the maturity level of securing jobs for everyone.
These kind of supplementary programmes are very important for the poor people residing in both rural and urban areas and also residing in small 8 medium towns.
Seasonally unemployed can also be offered seasonal employment through such special employment programmes. Moreover backward people like landless agricultural labourers, marginal formers, rural artisans, tribal people settled in remote and hilly areas can also be benefited from such progrmmes.
The programmes may be chalked out by providing direct wage employment as on rural capital works or in the form of providing assets or providing inputs to those people for self-employment. Currently, the steps taken by the government for the implementation of NREGA is a right step in this direction.
(ii) Raising the Rate of Capital Formation:
In order to reduce the problem of unemployment, in general, it is quite necessary to raise the rate of capital formation in the country. Raising the rate of Capital formation is necessary to expand the volume of work.
Capital formation can directly generate employment in the capital goods sector. Raising the capital formation helps the country to raise its capital-stock and thereby can raise the productivity of workers by raising the volume of capital available per workers.
(iii) Manpower Planning:
Management of human resources in a right and scientific manner is quite important for solving the problem of unemployment. This is important for ensuring promotion of employment scope as well as for realization of development of the economy. All these call for proper manpower planning which requires the following measures.
Firstly, going beyond the narrow domain of manpower planning simply related to matching demand and supply of skilled personnel, it is quite important to adopt effective remedies to cut down the growth rate of population which in turn reduce the growth rate of labour supply after a gap of period and thereby reducing the problem of unemployment.
Secondly, in order to attain effective use of skills it is essential to tailor the supply of skilled labour as per the it’s requirement so that excess or shortages in skills in different sectors are not faced.
Thirdly, while continuing with present strategy to promote high level skill formation through education and Training confined to a small proportion of labour force, it is also essential to improve the capabilities of large number of general people for their development.
This calls for several inter-related measures like making provision for adequate food and nutrition, elementary education, proper health facilities, training for jobs etc.
Fourthly, while introducing special programmes for employment, it is quite essential to ensure that the programmes rightly matches the characteristics and abilities of targeted group and also match with the overall development plans of various sectors. This will definitely make schemes quite useful and meaningful.
Essay # 6. Characteristics of Employment Policy Followed in India–Its Critical Evaluation:
Since the inception of planning, the Government of India has been pursuing its employment policy for eliminating the problems of unemployment.
The following are of its broad characteristics:
As the unemployment problem in India is multi-dimensional thus the policy followed by the government to tackle this problem is multi-faceted our which constitutes many-sided approach. Thus the employment policy followed in India constitutes many sub-policies to tackle various forms of unemployment including under employment.
(ii) Emphasis on Self-Employment:
The employment policy of India has given due emphasis on self- employment as a small proportion of our labour force is engaged through wage employment and the majority (56 per cent) of the workforce is self-employed.
Thus the employment policy makes provision for training of skills, supply of inputs, marketing of products, extending loan etc. so as to make them self-employed in various activities, like agriculture and allied activities, village and small industries, non-farm activities and also in informal sector.
(iii) Emphasis on Productive Employment and Asset Creation:
Employment policy of our country lays stress on creation of productive employment and also on creation of assets for the poor workers.
(iv) Employment Generation:
With the growth of various sectors, the employment policy gave due stress an employment generation at a targeted growth rate fixed under different plans through different employment generation programmes like NREP, RLEGP, JRY etc.
(v) Special Employment Programmes:
Employment policy of India has incorporated different special employment programmes both for rural and urban areas. These includes IRDP, TRYSEM, DWCRA, JGSY, JRY, EAS, AGSY, etc. for rural areas and PMRY, SJSRU, NRY etc. for urban areas.
(vi) Employment for the Educated:
Employment policy has made provision for tackling the educated unemployment prevailing both in rural and urban areas through employment schemes related to processing, banking, trading, marketing etc.
(vii) Manpower Planning:
The employment policy has taken certain measures for ensuring proper development of human resources and also through right deployment. Stress is given on attaining balancing of demand and supply of skilled manpower.
It is important to make critical evaluation of the employment policy followed in India both in terms of achievements and failures. Undoubtedly some increase in employment has taken place in all the sectors of the country since 1951, more specially in recent times.
The average growth rate of employment per annum from 2.7 per cent during 1983-94 to 1.0 per cent during 1994-2000. During 1998-99 and 1999-2000, the overall growth rate of employment in the organised public and private sector remained negative.
Moreover a significant portion of the employment generated has been able to benefit the poor and weaker sections of the population and helped a number of them to reach above the poverty line.
However, improvement that has taken place on the employment front can be considered inadequate for the growing number of unemployed. The large number of people still lying below the poverty line is a pointer to such inadequacy. Even then it is quite important to point out some of the positive and negative aspects of the policy of employment followed by the government.
Positive Aspects of the Policy:
Since the inception of planning, the broad perception of employment generation followed in our country has been found largely correct. The following four components of the employment policy usually favoured employment generation on a major scale. Firstly, since the second plan, our policy has been approaching to the long term perspective of full employment at higher incomes.
Development of modern industries along with capital goods industries including infrastructure would strengthen the economy and help reach high income employment at a later stage.
Secondly, provision has been made for the promotion of labour intensive small scale and cottage industries, Thirdly, considering the inadequate employment growth achieved through industrial activities, the policy devised special employment programmes for generating jobs work to rural and vulnerable sections of population. Fourthly, employment policy pursued in the country helped to attain self-employment of a faster rate than wage employment.
Weaknesses of the Policy:
However, the employment policy followed India is not free from faults. The faults are mostly related to its unsatisfactory implementation and inadequate employment orientation as discussed in the following manner.
Firstly, unsatisfactory implementation of the policy has been mostly related to long term slow growth of the economy, widespread industrial sickness and retrogression in growth in industrial sector since mid- sixties.
Moreover, it was also related to slow and poor execution of special employment programmes. Secondly, the faults in the employment policy are mostly related to inadequate attention to full employment except in the Ninth and Tenth Plan, where measures like too much emphasis on capital intensive investment and lesser emphasis on labour intensive investment, inadequate steps to absorb labour surpluses and inadequate arrangement for manpower planning educated and skilled personnel were taken.
Essay # 7. Employment Policy and Schemes in India:
Since the Third Five Year Plan, the Government of India launched certain special programmes for removing unemployment problem in the country. With that purpose, the Government of India, set up Bhagawati Committee to suggest measures for solving growing unemployment problem in the country.
The Bhagawati Committee submitted its report in 1973 and suggested various schemes like rural electrification, road building, rural housing and minor irrigation works. Accordingly, the Government undertook various programmes to generate employment opportunities and to alleviate under-employment prevailing in the country.
These programmes were as follows:
(a) Rural Works Programmes:
This programme was undertaken to generate employment opportunities for 2.5 million persons and also for the construction of civil works of a permanent nature. But this programme generated employment only to the extent of 4 lakh persons only.
(b) Marginal Farmers and Agricultural Labourers Development Agencies (MFALDA):
During the Fourth Plan this scheme was introduced for marginal farmers and agricultural labourers for assisting them with subsidized credit support for agricultural and subsidiary occupations like horticulture, dairy, poultry, fishery etc.
(c) Small Farmers’ Development Agencies (SFDA):
This scheme was also introduced during the Fourth Plan with the object to provide small farmers credit so that they, could avail latest technology for intensive agriculture and also could diversify their activities.
(d) Half-a million Job Programme:
To tackle the problem of educated unemployment, a special programme—”Half a million job programme” was introduced. In 1973-74, provision of Rs 100 crore was made and different states and Union Territories were asked to formulate and implement this scheme for securing an employment opportunities for definite number of persons.
(e) Job education for unemployed:
In 1972-73, another programme for educated unemployed and for highly qualified engineers, technologists and scientists were prepared. Under this scheme, a sum of Rs 9.81 crore was allotted to the states which created 45,000 job opportunities for the educated persons.
(f) Drought Area Programme:
This programme was introduced for the economic development of certain vulnerable areas by organising productive and labour-intensive programmes like medium and minor irrigation, soil conservation, afforestation and road construction. During 1970-72, the government spent Rs 30.80 crore, generating employment about 4.70 million man-days and in 1972-73 by spending Rs 38.51 crore about 40 million man-days of employment was generated.
(g) Crash programme for rural employment:
This scheme was introduced in 1971-72 for generating additional employment through the introduction of various productive and labour-intensive rural projects.
The main objectives of these programmes were to provide employment to 100 persons on an average to each block over the working seasons of 10 months in every year and secondly to produce durable assets. But the various schemes introduced during the Fourth Plan could not succeed in solving the problem of rural unemployment and underemployment.
Employment Policy in the Fifth Plan:
The Fifth Plan document laid emphasis on the generation of employment in rural areas and aimed at absorbing the increments in the labour force during the plan period by stepping up rates of public investment.
This scheme was introduced in April 1977 for benefitting the rural poor and more particularly the landless agricultural labourers. Under this scheme, a part of wages those workers engaged in rural works was paid in terms of food grains. The Central Government supplied these food grains to the State Government free of charge. In this way off-season employments were made available to rural unemployed.
Employment Policy in the Sixth Plan:
The Sixth Plan in its Employment Policy admits, “In the field of employment the picture has been far from satisfactory. The number of unemployed and under-employed has risen significantly over the last decade. In the above context therefore our employment policy should cover two major goals: Reducing underemployment by increasing the rate of growth of the gainfully employed and reducing unemployment on the basis of usual status commonly known as open unemployment”.
(i) National Rural Employment Programme:
In October, 1980, the NREP replaced the Food-for- work programme. In this programme State Governments received central assistance both in the form of food grains and cash for undertaking productive works in the rural areas.
During the Sixth Plan, total expenditure incurred by both the Central and State Government were of the order of Rs 1,837 crore and total food grains utilisation was 20.57 lakh tonnes. Total employment generation under this programme during the Sixth Plan was 1,775 million man-days.
During the Sixth Plan overall employment increased by 35.60 million standard person year (SPY) as against the target of 34.28 million SPY. During the Sixth Plan the growth rate of employment was 4.32 per cent per annum. During the Sixth Plan other programmes like IRDP and RLEGP were introduced.
Employment Policy in the Seventh Plan:
During the Seventh Plan, the magnitude of employment requirement was worked out at 47.58 million. Accordingly, the Seventh Plan document mentioned: “It is expected that additional employment of the order of 40.36 million standard person years would be generated during the Seventh Plan with an implied growth rate of 3.99 per cent per annum.
The special employment programmes of NREP and RLEGP would generate 2.26 million standard persons years of employment in 1989-90. The employment generation of IRDP has been estimated as 3 million SPY mainly concentrated in agriculture and other sectors”. Thus the Seventh Plan decided to supplement the efforts of employment generation by direct employment programmes like IRDP, NREP, RLEGP and TRYSEM.
(j) Integrated Rural Development Programme (IRDP):
The Sixth Plan proposed to integrate multiplicity of agencies for providing rural employment like Employment Guarantee Scheme, SFDA, MFALDA, Drought Prone Area Programme, Command Area Development Programme etc. Accordingly, on 2nd October 1980, the Integrated Rural Development Programme was introduced.
This programme was a multi-pronged attack on the problem of rural development and was designed as an anti-poverty programme. During the Sixth Plan this programme was initiated in all the 5,011 blocks of the country. To implement this scheme one District Rural Development Agency was established in every district.
During the Sixth Plan, a sum of Rs 1,661 crore was spent on this programme as against the provision of Rs 1,500 crore and the total number of beneficiaries covered during the plan period was 16.56 million as against the target of 15 million.
The Seventh Plan set a target to assist 20 million households under IRDP and the total allocation under this programme was Rs 3,474 crore. During this plan about 18.2 million families were assisted and about Rs 3,316 crore was utilised.
(k) Rural Landless Employment Guarantee Programme (RLEGP):
The Rural Landless Employment Guarantee Programme was introduced on 15th August, 1983 with the sole object of generating gainful employment opportunities, to create productive assets in rural areas and for improving the overall quality of rural life.
In this programme preference in employment is given to landless labourers, women scheduled caste and scheduled tribes. This programme is funded fully by the Central Government.
During the Seventh Plan, Rs 1,744 crore was provided by the central sector to generate 1,013 million man-days of employment during the plan period. But during the first three years of the plan Rs 1,743 crore was utilised and generated employment to the extent of 858 million man-days only. Thus 85 per cent of the target was only realised.
The Seventh Plan had earmarked a total outlay of Rs 2,487 crore for the National Rural Employment Programme out of which centre sanctioned Rs 1,251 crore. The Seventh Plan sets a target to generate employment to the extent of 1,445 million man-days. But during the first four years of the Seventh Plan nearly Rs 2,940 crore were spent under NREP generating 1,447.7 million man-days of employment which has fulfilled plan target.
Jawahar Rozgar Yojana (JRY):
Jawahar Rozgar Yojana was launched on 28th April, 1989 by the Prime Minister Rajiv Gandhi. Under the programme, all the existing rural wage employment programmes like National Rural Employment Programme and Rural Employment Committee Programme were merged.
The programme (JRY) aims at reaching each and every panchayats of the country. In this programme 80 per cent of resources would be funded by the centre and the rest 20 per cent by the States. In the year 1989-90, the centre made a provision of Rs 2,100 crore.
In this programme allocation of funds to the State is being made in proportion to the size of their population below the poverty line. In this programme, on an average a village panchayat with its population of 3,000 to 4,000 people will receive between Rs 80,000 to Rs 1 lakh every year. It was also decided to provide employment to at least one member in each poor family for at least 50 to 100 days in a year.
Besides this, the National Scheme of Training of Rural Youth for Self Employment (TRYSEM) was also introduced in the country. This programme was meant for generating self-employment opportunities by imparting training to the rural youths in various trades and skills.
Thus considering all these programmes introduced in the employment policy of the country under different plans, it can be concluded that these programmes could not make much headway in solving both the rural and urban unemployment in the country.
Employment Policy in the Eighth Plan:
Although various employment generation schemes were implemented till the completion of the Seventh Plan, the problem of unemployment faced by the country still remains grave. Total unemployment in the country totaled 23 million in the year 1992. In 1981-91, the country registered a 2.1 per cent growth rate in population while the growth rate of the labour force was 2.5 per cent per annum.
In 1991, the total population of the country was estimated at 837 million of which the labour force constituted about 315 million. Thus the growth of the labour force has been higher than the population growth but the growth rate of employment, which remained only 2.2 per cent per annum during the period 1971-91, has remained lower than of labour force.
It has been estimated that the country will have 94 million unemployment by the year 2002. Thus in Order to wipe out the projected unemployment in the country completely by 2002, the country should achieve the required annual employment growth rate between 2.6 to 2.8 per cent. As unemployment is a major socio-economic problem it must be tackled on a priority basis.
At the outset of the Eighth Five Year Plan (1992-97), employment was estimated to be about 301.7 million. The open unemployment was estimated at 17 million, of which the educated unemployment accounted for 7 million. Severe under-employment was estimated as 6 million. Thus the backlog of unemployment for planning purposes was thus reckoned at 23 million in April 1992.
As the net additions to labour force during the Eighth Plan and during the period 1997-2002 were estimated at 35 million and 36 million respectively, in order to reduce unemployment to negligible levels by 2002, the employment should grow at the average annual rate of about 2.6 to 2.8 per cent over the ten year period 1992-2002.
Considering the present unemployment scenario, the Eighth Five Year Plan sought to achieve 2.6 per cent rate of growth of employment, corresponding to an average annual growth rate of GDP of 5.6 per cent envisaged in the plan.
Thus the Eighth Plan emphasised the need for a high rate of economic growth, combined with a faster growth of sectors, sub-sectors and areas which have relatively high employment potential for enhancing the pace of employment generation.
The plan sought to achieve the target by laying emphasis on a crop-wise and geographic diversification of agricultural growth, wasteland development, promotion of agro-based activities, rural non-farm activities including rural industries, the decentralised and small scale sector of industry, the urban informal sector and the services sector, expansion of rural infrastructure, housing and health and educational services especially in rural areas, revamping of the training system and streamlining of the special employment programmes to integrate them with area development plans.
Thus all these above are considered as basic elements of the employment oriented growth strategy envisaged in the plan. Additional employment opportunities to the extent of 8 to 9 million per year, on an average, during the Eighth Plan period and of the order of 9 to 10 million per year, on an average, during 1997-2002 period are expected to be generated.
Thus the employment strategy as envisaged in the Eighth Plan generated around 42.5 million additional employment during the period 1992-97. The continuation of the strategy during the Ninth Plan period generated around 47.5 million additional employment during the period 1997-2002.
Thus the employment strategy wiped out the entire backlog of open unemployment and a sizable part of the severe under-employment in the country.
The Eighth Plan document has also identified various problems as factor responsible for the lower growth of employment in the country. These include:
i. Mismatch between skill requirement and employment opportunities;
ii. Low technology, low productivity and low wage;
iii. Occupational shifts from artisanal of unskilled employment in agriculture;
iv. Declining employment in agriculture; and
v. Under-employment due to seasonal factors and more labour supply than demand.
Endorsement of New Employment Schemes by NDC and its Subsequent Launching:
The 46th meeting of the National Development Council, held on 18th September, 1993, unanimously endorsed three employment generating schemes, covering the rural poor, educated unemployment and women.
Accordingly in 1993-94, two new programmes were launched in order to give a fillip to employment generation. These two programme included: (i) Employment Assurance Scheme (EAS), and (ii) Prime Minister’s Rozgar Yojana (PMRY) for the Educated and Unemployed youth.
(i) Employment Assurance Scheme (EAS):
The Employment Assurance scheme was introduced on 2nd October, 1993 to make provision for “assured employment” for the rural poor.
The highlights of the scheme are as follows:
The scheme (EAS) was implemented in the 3,175 backward blocks with an aim to provide 100 days of unskilled manual work to all those who were eligible in the age group of 18-60 years.
The scheme will provide unskilled manual work to rural poor with statutorily fixed minimum wages linked to the quantum of work done. Its funding pattern is 80: 20 by the Centre and the States respectively. The scheme is targeted at the poor especially during the lean agricultural season in rural areas.
The works undertaken are run departmentally and no contractors are hired. Part of the wages may be paid in terms of food grains. The collector of the district is assigned to oversee the performance. Under this scheme, applicants will be given a “family card” listing the number of days of employment under different programmes.
The objective of the scheme (EAS) is to create economic infrastructure and community assets for sustained employment and development. Specific guidelines had been sent by the centre to various states so as to ensure that the provision of employment under the scheme resulted in the creation of durable assets in each block where the scheme had been launched. The implementing agencies were made responsible for the payment of minimum wages according to the standard of performance under the scheme.
A part of the wages were paid in the form of food grains not exceeding 50 per cent of the wages in cost. However, the payment of wages in terms of food grains has been made optional, depending upon the price of food grains in the open market.
During the first year since introduction, i.e., during 1993-94 more than 49.5 million man- days of employment has been generated and nearly 1.7 million have been registered under the newly launched Employment Assurance Scheme (EAS).
The states where maximum number of man day of employment generated include Andhra Pradesh followed by Madhya Pradesh, Orissa and West Bengal. During the first eight months of 1994-95 about 115 million man-days of employment was generated under the EAS scheme.
Among these states, about 2.9 million man-days of employment had been generated in Andhra Pradesh while the figure touched about 2.3 million in Madhya Pradesh. In Orissa, nearly 1.5 million man-days of employment was generated and the figure was almost the same in the case of West Bengal.
In 2003-04, total man-days of employment generated under EAS was around at 37.28 crore. At the end of 2003-2004. EAS had generated total employment to the extent of 302.25 crore man-days, since its inception in October 1993.
(ii) Mahila Samridhi Yojana (MSY):
The Mahila Samridhi Yojana was also launched on 2nd October, 1993 in order to benefit all rural adult women. This scheme entitles every adult women who opens an MSY account with Rs 300 to get an incentive of Rs 75 for a year.
The MSY is aimed at empowering rural women with greater control over household resources and savings. It is now implemented through post offices. At the end of October 1995, a total of 1,25,423 accounts had been opened under the scheme.
(iii) Prime Minister’s Rozgar Yojana (PMRY):
On 2nd October, 1993, the Government introduced another new employment oriented scheme—Prime Minister’s Rozgar Yojana (PMRY) under the on-going Eighth Plan. The scheme is specially designed for educated unemployed youth which will provide employment to more than one million persons by setting up seven lakh micro enterprises during the Eighth Five Year Plan in industry, service and business.
The scheme initially covered urban areas only during the 1993-94, subsequently covered both the urban and rural areas. The scheme but involved an expenditure of ? 540 crore to meet the capital subsidy, training and administrative cost during the remaining period of the Eighth Five Year Plan.
The scheme provided a loan, up to a ceiling of Rs 1 lakh in case of individuals. If two or more eligible persons enter into a partnership, projects with higher cost can be assisted provided the share of each person in the project cost did not exceed Rs 1 lakh.
An entrepreneur is required to contribute 5 per cent of the project cost as margin money in cash. Subsidy at the rate of 15 per cent of the project cost subject to a ceiling of Rs 7,500 per entrepreneur was provided by Central Government. All those who undertook Government sponsored technical course for a minimum duration of six months besides matriculate and ITI diploma holders were be eligible for the scheme.
Under the PMRY, unemployed educated youth between the 18-25 years age group and of families with annual income up to Rs 24,000 along with certain educational and other criteria were eligible for such assistance.
In 2003-04, total micro enterprises developed under PMRY was 1.2 lakh and total employment generated was 1.8 lakh. At the end of 2003-2004 PMRY has developed micro enterprises to the extent of 17.2 lakh and generated employment to the extent of 24.82 lakh since its inception in October 1993. Under PMRY, the Government assisted 20 lakh youth for self-employment during the Tenth Plan.
Moreover, the achievement of JRY in respect of employment generation was 782 million man- days in 1992-93 and 1,026 million man-days in 1993-94. The 1994-95 budget provide for Rs 70.1 billion and set a target of employment generation at 980 million man-days, against which the achievement of JRY in 1994-95 was 952 million man-days.
In 1998-99, the target of employment generation under JRY is fixed at 396.6 million man-days but during 1998-99, the achievement was 375.2 million man-days. Under JRY, about 50 per cent employment generation during 1998-99 came from SC/ST group.
(v) Nehru Rozgar Yojana (NRY):
Nehru Rozgar Yojana (NRY) contemplated by the Ministry of Urban Affairs was designed to create employment opportunities for urban poor. This programme was launched in October 1989 with the objective of providing employment opportunities to the unemployed and under employed urban poor.
The Yojana is applicable to household living below the poverty line in urban slums and within this broad category, SC/ST and women constitute a special target group.
Nehru Rozgar Yojana consists of three sub schemes:
(a) Scheme of Urban Micro enterprises. (SUME),
(b) Scheme of Urban Wage employment (SUWE) and
(c) Scheme of Housing and Shelter Upgradation (SHASU).
So far, 6.55 lakh beneficiaries have been assisted in setting up of micro enterprises under SUME. About 541.52 lakh man-days of work have been generated through the construction of economically and socially useful public assets under SUWE and SHASU till 1994-95. Under NRY, total number of families assisted was 2.37 lakh in 1992-93, 1.52 lakh in 1993-94, 1.25 lakh in 1994-95 and 0.6 lakh during 1997-98 as against the target of 1.2 lakh.
Total man-days of employment generated under NRY was 140.5 lakh in 1992- 93, 123.7 lakh in 1993-94, 92.9 lakh in 1995-96 and 44.6 lakh during 1997-98 as against target of 135.8 lakh. In December, 1997, this programme was amalgamated with SJSRY.
(vi) Prime Minister’s Integrated Urban Poverty Eradication Programme (PMIUPEP):
The Prime Minister’s Integrated Urban Poverty Eradication Programme (PMIUPEP) was launched in 1995-96 with a specific objective of effective achievement of social sector goals, community empowerment, employment generation and skill upgradation, shelter upgradation and environmental improvement with a multi-pronged and long-term strategy.
The Programme covered 5 million urban poor living in 345 class II Urban Agglomerations (towns) with a population of 50,000 to 1,00,000 each. There was a provision for Rs 800 crore as central share for the entire programme period of 5 years. In 1995-96, Rs 100 crore were allocated for the programme.
The programme benefitted about 150 lakh urban poor in 1996-97. As on October 1996, over 14,000 and 1,00,000 beneficiaries had been identified for self-employment and shelter upgradation respectively. In December 1997, this programme was amalgamated with SJSRY.
(vii) The Swarna Jayanti Shahari Rozgar Yojana (SJSRY)/National Urban Livelihoods Mission (NULM):
The Swarna Jayanti Shahari Rozgar Yojana (SJSRY) which subsumed the earlier three urban poverty programme viz., Nehru Rozgar Yojana (NRY), Urban Basic Services for the poor (UBSP) and Prime Minister’s Integrated Urban Poverty Alleviation Programme (PMIUPEP) came into operation from December 1997.
This programme sought to provide employment to the urban unemployed or underemployed poor living below poverty line and educated up to XI standard through encouraging the setting up of self-employment ventures or provision of wage employment.
The scheme gives special impetus to empower as well as uplift the poor women and launches a special programme, namely, Development of women and children in Urban Areas (DWCUA) under which groups of urban poor women setting up self-employment ventures are eligible for subsidy up to 50 per cent of the project cost.
An allocation of Rs a 181.0 crore was provided in 1999-2000 (BE). In 1998-99, the DWCUA scheme had assisted 0.01 lakh women related to their self-employment schemes. During 2001-02, Rs 168 crore was allocated against which’ Rs 45.50 crore was spent. In 2002-03, all allocation of Rs 105 crore was provided against which Rs 74.0 crore was spent.
Two special schemes of SJSRY include—the Urban Self-Employment Programme (USEP) and the Urban Wage Employment Programme (UWEP). SJSRY is funded on a 75: 25 basis between Centre and States. During 1997-98, 1998-99 and 1999-2000, a sum of Rs 102.51 crore, Rs 162.28 crore and Rs 123.07 crore respectively were spent in the States and Union Territories under different components of SJSRY.
About the performance of SJSRY, total number of beneficiaries under USEP was 0.04 million in 1998-99 and 0.10 million in 2003-2004 and total number of persons trained under USEP was 0.05 million in 1998- 99 and 0.12 million in 2003-2004. Again, total man-days of employment generated under UWEP was 6.60 million in 1998-99 and 10.14 million in 1999-2000 and 4.56 million in 2003-04.
The number of urban poor assisted for setting up micro/group enterprises in 2005-06 was 0.9 lakh against a target of 0.80 lakh. The number of urban poor imparted skill training in 2005-06 was 1.42 lakh against a target of 1.0 lakh.
Budget allocation for the SJSRY scheme for 2011-12 is Rs 813.0 crore of which Rs 676.80 crore had been utilized till February 16, 2012. During 2009-10, as reported by States/UTs, a total of 28,613 urban poor have been assisted in setting up individual enterprises, 13,453 urban poor women have been assisted in setting up group enterprises and 27,463 urban poor women have been assisted through a revolving fund for thrift and credit activities and also 85,185 urban poor have been imparted skill training. A total of 3,63,794 beneficiaries have been assisted in the year 2011-12.
SJSRY was replaced by the NULM in September 2013. It aims to provide gainful employment to urban employed and under employed. The NULM will focus on organizing urban poor in SHGs, creating opportunities for skill development leading to market based employment, and helping them to set up self- employment ventures by ensuring easy access to credit.
The NULM aims at providing shelter with basic amenities to urban homeless. If also plans to address livelihood concerns of urban street vendors. During 2013-14, Rs 720.43 crore was released and the number of persons skill trained and assisted for self-employment was 6,83,452 and 1,06,250 respectively.
(viii) The Swarnajayanti Gram Swarozgar Yojana (SGSY) and NRLM:
SGSY was launched in April, 1999 and is the only self employment programme currently being implemented. It aims at promoting micro enterprises and to bring the assisted poor families (Swarozgaris) above the poverty line by organizing them into Self Help Groups (SHGs) through the process of social mobilization, training and capacity building and provision of income generating assets through a mix of Bank credit and Government subsidy.
The scheme is being implemented on a cost-sharing ratio of 75: 25 between the Centre and the States. Since inception of the Scheme up to December, 2012 a total allocation of Rs 42,16,842 crore was made available by the Centre and the States which formed 42.05 lakh SHG’s and assisted 168.46 lakh Swarojgaris. The SGRY restructured as National Rural Livelihood Mission (NRLM).
The SGSY is restructured as National Rural Livelihood Mission (NRLM) and it has been renamed as Ajeevika and now being implemented in mission mode across the country since 2011.
The main features of Ajeevika are:
(a) One women member from each identified rural poor household to be brought under the SHG network;
(b) Ensuring 50 per cent of the beneficiaries from SC/STs, 15 per cent from minorities, and 3 per cent persons with disability while keeping in view the ultimate target of 100 per cent coverage of BPL families;
(c) Training for capacity building and skill development;
(d) Ensuring revolving fund and capital subsidy;
(e) Financial inclusion;
(f) Provision of interest subsidy;
(g) Backward and forward linkages and
(h) Promoting innovations.
The objective of NRLM is to ensure that each family, once it is in the SHG network for a period of 6- 8 years, it is able to achieve household food security and have 3-4 stabilized livelihoods through a strong convergence with panchayati raj institutions (PRIs).
The mission has covered 97,391 villages and mobilized around 20 lakh SHGs, of which 3.8 lakh are new. During 2013-14, Rs 22,211.18 crore of SHG bank credit has been disbursed. For 2014-15, Rs 3,560 crore has been allocated to NRLM.
(ix) Sampoorna Grameen Rozgar Yojana (SGRY):
The Sampoorna Grameen Rozgar Yojana (SGRY) was launched in September 2001. The schemes of Jawahar Gram Samridhi Yojana (JGSY) and Employment Assurance Scheme (EAS) have been fully integrated with SGRY.
The objective of the scheme is to provide additional wage employment along with food security creation of durable community, social and economic assets and infrastructure development in the rural areas. The scheme envisages generation of 100 crore man-days of employment in a year. The cost of the programme is to be shared between the Centre and the State on a cost sharing ratio of 87.5 : 12.5 (including food grains component).
In 2005-06, 82.18 crore person-days of employment were generated with the centre releasing Rs 5497.43 crore as cash component and about 37.30 lakh tonnes of food grains to the states and UTs. Besides, under special component of SGRY with the states/ UTs meeting the cash components, centre released 15.64 lakh tonnes of food grains to the 11 calamity affected states.
In 2007-08, up to December 31, 2007, the number of person days of employment generated under SGRY was 11.60 crore while the centre’s contribution in terms of cash and food grain component up to December 31, 2007 were Rs 1,142.27 crore and 9.55 lakh tonnes.
(x) Pradhan Mantri Gramodaya Yojana (PMGY):
PMGY was launched in 2000-2001 in all the States and the UTs in order to achieve the objective of sustainable human development at the village level. The PGMY envisages allocation of Additional Central Assistance to the States and UTs for selected basic minimum services in order to focus on certain priority areas of the Government.
PMGY initially had five components viz., Primary Health, Primary Education, Rural Shelter, Rural Drinking Water and Nutrition. Rural Electrification has been added as an additional component from 2001-02. The allocation for PMGY in 2000-01 was Rs 2,500 crore. This was enhanced later on to Rs 2800 crore for 2001-02. For the year 2002-03, an amount of Rs 2,800 crore was provided.
During the last two annual plans, the six sectoral programmes of PMGY were managed by the concerned Central Administrative Departments. However, from the current year, the Planning Commission is to directly implement this programme. New guidelines on the implementation of the PMGY during Annual Plan 2002- 03 have been issued to all the State Governments and UTs.
(xi) Pradhan Mantri Gramodaya Yojana (Gramin Awas):
The scheme seeks to achieve the objective of sustainable habitat development at the village level. Central allocation for rural shelter component of PMGY. GA in 2001-02 was Rs 406.85 crore out of which an amount of Rs 291.51 crore was released by Ministry of Finance.
(xii) Pradhan Mantri Gramodaya Yojana—Rural Drinking Water Project:
Under this programme, a minimum 25 per cent of the-total allocation is to be utilised by the respective States/UTs on projects/schemes for water conservation, water harvesting, water recharge and sustainability of the drinking water sources in respect of areas under Desert Development Programme/Drought Prone Areas Programme.
(xiii) Pradhan Mantri Gram Sadak Yojana (PMGSY):
The PMGSY, which was launched on 25th December, 2000 is a programme to provide road connectivity through good all-weather roads to 1.60 lakh Unconnected Habitations with a population of 500 persons or more in the rural areas by the end of the Tenth Plan period (2007) at an estimated cost of Rs 60,000 crore.
The programme is being executed in all the States and Six Union Territories. While the focus of the programme is on providing road connectivity to Unconnected Habitations of stipulated population size, connectivity is being provided to all Panachayat Headquarters and places of tourist interest under the PMGSY irrespective of the population size.
Thus, the main objective of PMGSY is to provide all weather connectivity to all eligible unconnected habitations in rural areas of the country having population of 500 persons and above in plain areas and 250 persons and above (as per 2001 census) in special category states, selected tribal and desert areas.
It also permits upgradation of existing rural roads. In 2001-02, an amount of Rs 2,500 crore was allocated for this scheme. Since inception, projects for providing new connectivity to 1,44,717 habitations with a road, length of 5,44,462 km have been cleared at an estimated cost of Rs 1,82,560 crore including upgradation cost.
A total of 3,99,979 km road length have been completed and new connectivity have been provided to over 97,838 habitations up to March 2014. During 2013-14, about 25,316 km of all-weather road including new connectivity to 6,560 habitations has been completed at an expenditure of Rs 13,095 crore. Upgradation on selected existing roads has been taken up.
The present source of funding for PMGSY is the diesel cess, 50 per cent of which is earmarked for PMGSY. Efforts are underway to raise additional resources for the programme with financial assistance from the World Bank and the Asian Development Bank.
(xiv) Maharma Gandhi National Rural Employment Guarantee Act Scheme (MGNREGA):
The National Rural Employment Guarantee Act Scheme (NREGS) was formally launched on February 2, 2006 by Prime Minister Manmohan Singh at Bahdlapalle Gram Panchayat of Anantpur district of Andhra Pradesh marking an important milestone of the UPA Government’s efforts to provide jobs to the rural poor.
The Act passed in August 2005 was launched in 200 districts and has been expanded to 330 districts in the second phase and by next four years, i.e., by 2008-09 all the districts was covered under the Act.
This is for first time a job guarantee scheme has been introduced in the country. Under this Act, one member of each of the country’s 150 million rural households will have the legal guarantee to get at least 100 days of employment at minimum wages of Rs 65 for one person in each household irrespective of poverty levels they belong to.
Accordingly, rural household in selected districts will have the right to register themselves with the local Gram Panchayats as persons who seek employment under the Act. Thus this Act provides a social safety net for the vulnerable groups of people of our society and thereby makes an attempt to attain growth with equity.
The main features of this Act are:
(a) NREGA is not just a scheme but an Act providing legal guarantee to work.
(b) Any adult person in the notified are willing to do unskilled manual work, can apply for registration with Gram Panchayat. The Panchayat will then issue a job card to that person and the person will be entitled to apply for employment.
(c) The registered persons will then have the legal right to demand employment.
(d) The person will get the right to get employment within 15 days of their demand.
(e) The person will get the right to receive unemployment allowance if the employment is not given within 15 days.
(f) One third of the beneficiaries will be women.
(g) Employment will be given within 5 km. of the applicant’s residence, else additional wags will be paid.
(h) Panchayati Raj Institutions ((PRIs) will have the principal role in planning, monitoring and implementation.
(i) The beneficiary will get the right for statutory wages.
(j) The beneficiary will get the right to worksite facilities like drinking water, sheds for children and first aid.
The Centre is bearing 80 per cent of the total cost of the programme and the State Government will have to play a crucial role. The wage component of the implementation of this Act will be borne by the centre and cost of materials and other components of the work would be shared between the Centre and the State Governments.
Thus this flagship programme of the government aims at enhancing livelihood security of households in rural areas by providing at least one hundred days of guaranteed wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work with the stipulation of one-third participation of women.
The MGNREGA provides wage employment along with focusing on strengthening natural resource management through works that address causes of chronic poverty like drought, deforestation and soil erosion and thereby encourage sustainable development. The two-pronged objective of the Act are firstly to ensure food security through employment generation and secondly, creation of permanent assets.
However, the successful implementation of NREGA depends on two important factors, i.e:
(i) The efficient and regular functioning of Panchayati Raj institutions and
(ii) Proper use of the Right to Information Act.
However, the most striking feature of this Act, it is the first attempt of its kind at the national level to work out an employment guarantee programme with 80 per cent central funding and with its legal force which makes it quite different than that of other employment generation schemes introduced earlier in the country.
The MGNREGA, being a demand driven scheme, has its definite focus on works relating to water conservation, drought proofing, land development, flood protection/control and rural connectivity in terms of all-weather roads. Of the Rs11,300 crore allocated for NREGA in 2006-07 (BE) Rs 6,714.98 crore was released up to January 31, 2007.
Till January 31, 2007, about 3.47 crore job cards have been issued and of the 1.50 crore households, who have demanded employment, 1.47 crore households have been provided employment under the scheme. Under this scheme, up to December, 2006 of the 53.56 crore person-days of employment generated, 21.13 crore were for women, and of about 5.81 lakh work taken up, 2.34 lakh were completed.
As against the employment demanded by 2.61 crore rural households, 2.57 households have been provided wage employment during 2007-08. A budget allocation of Rs 12,000 crore (including NER Component) was made for 2007-08 and Rs 10,501.02 crore has been released till 30.01.2008. The Government is now considering a proposal of raising the number of days of guaranteed jobs from 100 days to 200 days.
In 2007-08, the IT-enabled network of India Post has been successfully utilised for disbursement of wages to the beneficiaries of NREGA in 19 districts of Andhra Pradesh and in all 22 districts of Jharkhand. The scheme is also operative in Karnataka, Madhya Pradesh, and West Bengal.
In 2008-09, the Government has stepped up the allocation for its flagship programme of rural employment scheme NREGA by over 65 per cent to Rs 26,500 crore. The additional amount of Rs 10,500 crore has been provided to meet the additional requirement of NREGA Scheme.
Under phase II, 130 additional districts were notified and brought under its ambit with effect from April 1, 2007. Under the programme, so far 293.46 lakh jobs have been provided to households. In 2008-09, the entire Sampoorna Grameen Rozgar Yojana (SGRY) was subsumed in NREGA Scheme.
The coverage was extended to all the rural districts of the country in 2008-09. At present, 619 districts are covered under NREGA. During the year 2008-09, more than 4.51 crore households were provided employment under the scheme. As against the budgeted outlay of Rs 33.000 crore for the year 2013-14, an amount of Rs 25,894.03 crore has been released to the states/UTs till January, 2014.
The number of households covered under the scheme increased considerably from 3.39 crore in 2007-08 to 4.47 crore in 2008-09 and then to 4.78 crore in 2013-14 with an average wage employment of 46 person days.
Out of the 219.72 crore person days of employment created under the scheme during 2013-14, 23 per cent and 17 per cent were created in favour of SC and ST population respectively and 53 per cent were in favour of women. Thus NREGA provides a social safety net for the vulnerable groups of people of our society and thereby makes an attempt to attain growth with equity.
The MGNEGA is thus playing an important role in improving the livelihood security as well as improving the resource base at the rural level. At national level with the average wage paid under the MGNEGA increasing from Rs 65 in 2006-07 to Rs 115 in 2011-12, the bargaining power of agricultural labourer has increased as even private sector wages have increased as shown in many studies.
Improved economic outcomes, especially in watershed activities, and reductions in distress migration are its other achievements. Wages under MGNREGA are indexed to the consumer price index for agricultural labour (CPI-AL). Recently the government has taken some initiatives under MGNREGA to make it much more effective and transparent.
i. The basket of permissible activities has been expanded to make it more meaningful.
ii. Electronic fund management system (eFMS) in all states has been initiated in a phased manner to reduce delay in payment of wages.
iii. Additional employment over and above 100 days per household is notified in drought-affected talukas or blocks is now permissible.
iv. Provision has been made for seeding in Aadhaar into the MGNREGA workers records in order to prevent leakage.
v. Convergence of the MGNEREGA with the total Sanitation Campaign (TSC) has been undertaken.
While commending the success of MGNREGA, Prime Minister Dr. Manmohan Singh recently observed that “MGNREGA has brought momentum in the financial inclusion of our rural population. Besides direct financial benefit, the scheme has given many indirect benefit to the people and brought down the migration graph”.
Nothing that more than four crore accounts have been opened in banks besides those in post offices, the Prime Minister observed that, “these bank accounts will assist the government in reaching the incentives of the Direct Benefit Transfer Scheme to the rural population. Moreover, the use of information technology in MGNREGA at many levels has helped making governance better and increase accountability and transparency in government work. There are enough proofs that the scheme has helped to a great extent in getting the small and very small farmers a better produce by increasing land productivity and water conservation.”
Thus it can be observed that with better planning of project design, capacity building of panchayati raj institutions (PRTs), skill up-gradation for enhanced employability, and reduction of transaction costs, gaps in scheme implementation could be plugged to a greater extent and the assets so created could make a much larger contribution towards raising land productivity and improvement of living conditions of rural people in general.
Employment Policy in the Ninth Plan:
The Draft Approach Paper of the Ninth Plan gave due recognition to the problem of unemployment. With that purpose, the Approach Paper has incorporated one of its Objectives as “Giving priority to agriculture and rural development with a view to generate adequate productive employment and eradication of poverty.”
The four dimensions of state policy as reflected in the strategy of the Ninth Plan has incorporated “generation of productive employment” as one of those dimensions. Accordingly the Ninth Plan has incorporated a primary objective to generate greater productive employment in the growth process of various sectors and by adopting labour intensive technologies in the unemployment prone areas.
In order to enhance employment opportunities for the poor, the Ninth Plan has Undertaken a National Employment Assistance Scheme, recognising the high incidence of under-employment and increasing casualization of labour.
The Approach Paper of Ninth Plan also mentioned that “Improvements in quality of employment can be achieved only in a situation of rapidly growing productivity to which the labour can lay a just claim. However, it is not merely enough to create the right kinds of employment opportunities, but also to provide the people with the human capital by which they can take advantage of these opportunities. Education and skill development are essential features of such empowerment. Free and compulsory education of children supported by an adequate midday meal programme in schools is the first step towards this end. In addition, special programmes will have to be implemented to develop skills, enhance technological levels and marketing channels for people engaged in traditional occupations.”
“There is no simple or unique correlation in the short-run either in theory or in Indian experience between the rate of growth of output and the rate of growth of employment.”
Under the present context, the growth process should be restructured in such a way so that employment opportunities grow at an accelerated pace and the country become successful to achieve the goal of full employment in the early part of new millennium.
In this connection, the Planning Commission has suggested the following measures to be adopted during the Ninth Plan period:
(a) Attainment of economic growth would be mostly from those sectors which have high employment potential.
(b) High priority would be accorded to attain growth and lines of production with high employment intensity along with the maintenance of demand-supply balance.
(c) Discouraging unnecessary and indiscriminate increase in capital intensity and encouraging the adoption of production techniques with higher employment potential per unit of capital.
(d) Lastly, reorienting public sector investment towards those sectors having employment bias and influencing private investment decisions to adopt technologies with high employment potential.
Again the draft Ninth Five Year Plan (1997-2002) approved by the National Development Council (NDC) on 19th February, 1999 has given priority to reduce the extent of unemployment and it has set a target to generate 50 million jobs during the Ninth Plan period.
Employment Policy in the Tenth Plan:
The Approach Paper to the Mid-Term Appraisal of the Tenth Plan has reiterated that employment growth should exceed the growth of labour force to reduce the backlog of unemployment.
Employment strategies advocated in the Approach Paper include:
i. Special emphasis to promote public investment in rural areas for absorbing unemployed labour force for asset creation.
ii. Identification of reforms in the financial sector to achieve investment targets in the Small and Medium Enterprises (SME) sector.
iii. Large scale employment creation in the construction sector, especially for the unskilled and semiskilled.
iv. Necessary support to services sector to fulfill their true growth and employment potentials and greater focus on agro-processing and rural services.
Thus the employment strategy in the Tenth Plan needs, therefore, to focus on adequate employment growth and on the qualitative aspects of employment. In order to enable the poor to access the opportunities and to ensure consistency between the requirement and availability of skills, emphasis will need to be placed on required skill development.
Thus the Tenth Plan document observed that the current backlog of unemployment at around nine per cent, equivalent to 35 million persons, is too high and every effort needs to be made to not only arrest the rising trend, but to actually reduce it during the Tenth Plan period itself.
On the whole, the Tenth Plan aimed at the creation of approximately 50 million employment opportunities during a period of 5 years, of which 30 million will be created from normal process of growth and rest 20 million will be created from special initiatives. The result of the 61st NSSO round show that above 47 million persons were provided employment during 2000 to 2005.
Employment Policy of the Eleventh Plan:
Generation of employment opportunities for the growing number of unemployed and new entrants to labour force is a great challenge. Doubling the growth of agricultural GDP to 4 per cent per annum will improve employment conditions in agriculture by raising real wages and reducing the number of underemployed in agricultural sectors.
The Approach Paper to the Eleventh Plan targets generation of additional employment opportunities in services and manufacturing, in particular, labour intensive manufacturing sectors such as food processing, leather product, footwear and textiles and in service sector such as tourism and construction.
It also calls for elimination of distorting fiscal incentives which foster capital intensity, infrastructure investment, removal of distortions that hinder competition, prevent entry and discourage graduation from unorganised to organised status; and greater emphasis on vocational training and skill development to improve employability of youth.
As Village and Small Scale Enterprises (VSE) will have to provide most of the employment during the Eleventh Plan, the Approach Paper also calls for redressing the problems faced by VSE units and home based workers, especially women which include non availability of timely and adequate credit, unrealizable or absence of power supply, requirement of permission from a number of government agencies and burden of multiple inspections. However, some direct employment will be available in the social sector, i.e., on health and education. Besides the wage employment programme like NREGS will also improve employment scenario considerably.
In this connection the Economic Survey, 2007-08 observed “the Eleventh Plan envisages rapid growth in employment opportunities while ensuring improvement in quality of employment. It recognises the need to increase the share of regular employees in total employment and a corresponding reduction in casual employment. The employment Generation strategy of the Eleventh Plan is also predicted on the reduction of under employment and movement of surplus labour in agricultural sector to higher wage and more gainful employment in the non-agricultural sector. Agriculture sector is projected to generate no increase in employment during the Eleventh Plan period. Employment in manufacturing is expected to grow at 4 per cent while construction and transport and communication are expected to grow at 8.2 per cent and 7.6 per cent respectively. The projected increase in total labour force during the Eleventh Plan in 45 million. As against this, 58 million employment opportunities would be created in the Eleventh Plan. This would be greater than the projected increase in the labour force leading to a reduction in the unemployment rate to below 5 per cent.”
But if we take into account the increasing participation of women, the total projected increase in labour force during the Eleventh Plan will be nearly 65 million. If we add the present backlog of unemployment of 35 million at the end of Tenth Plan then the total job requirements during the Eleventh Plan would be around 100 million.
But as 58 million employment opportunities will be created in the Eleventh Plan this would leave nearly 42 million workers to be absorbed in the non-agricultural unorganised sector, which is, no doubt, a difficult proposition.
If we consider the performance of the last decade with a negative employment growth in the organised sector, then the Eleventh Plan is too ambitious by expecting generation of 15 million jobs from the organised sector and in total generating 58 million employment opportunities during the Plan. Thus the estimates made by the planners is found highly unrealistic and over-optimistic considering the ground realities.
However, the projected increase in total labour force during the Eleventh Plan is estimated at 45 million. It is also projected that 58 million employment opportunities would be created during the Eleventh Plan.
This would be greater than the projected increase in labour force leading to a reduction in the unemployment rate below 5 per cent by the terminal year of the plan. It is expected that agriculture sector may not contribute towards any increase in employment during the Eleventh Plan.
Hence, the employment generation strategy of the Eleventh Plan is based on the reduction of underemployment and movement of surplus labor in agriculture sector to higher wage and more gainful employment in non-agricultural sector.
The Eleventh Plan has especially identified labour intensive manufacturing and services sectors with employment potential like food processing, leather products, footwear, textiles, wood and bamboo products, gems and jewellery, handicrafts, handlooms, tourism and construction for this purpose.
Thus the key strategy for achieving inclusive growth in the Eleventh Plan has been generation of productive and gainful employment, with decent working conditions, on a sufficient scale to absorb the growing labour force. The Eleventh Plan (2007-12) aims at generation of 58 million work opportunities in twenty one high growth sectors so that unemployment rate falls to 4.83 per cent by the end of the Plan.
The International Commission on Peace and Food, a non-government organisation headed by Dr. M.S. Swaminathan, made a study on the unemployment problem of the country. The Committee has come to the conclusion that a minimum of 100 million new jobs are needed by the year 2000 in the unorganised sector to achieve full employment and to eradicate poverty.
The findings of the team were in the form of a strategy statement which emphasises that there is potential to increase employment with emphasis on higher productivity, and income through extension of irrigation and green revolution to areas not hitherto covered and having potential, waste land development and diversification of agriculture to other productive activities like horticulture, aquaculture, sericulture and agro-processing.
The Centre of Advanced Development Research (CADR) has also criticised various employment generation programmes launched by the Government which has touched only a fringe of the problem and has suggested measures for labour-intensive, and land based programmes.
These include diversification of crop programme, which places high priority on the needs of the poor and on the transformation of the crop pattern from the present low-value to high-value and labour intensive programmes.
The Centre also suggests a jump in the production of milk and eggs, making the best use of water and land resources and improving 175 million hectares of degraded land which is about half of the total geographical area, mainly through afforestation.
Taking all these factors into considerations, it can be said that the future employment programmes of the country should be redressed in such a manner so that it can meet requirements of the people with maximum utilisation of scarce resources. Moreover, considering the depth of the problem it can be safely said that the government alone cannot tackle this problem alone.
Thus private sector should be fully involved in the employment programme of the country. Accordingly, the Planning Commission should chalk out programme for the private sector in order to involve the sector into the employment generation programme of the country.
Thus an appropriate joint strategy involving both the public sector and private sector is to be taken in order to tackle both the rural as well as urban unemployment of the country.
Essay # 8. Growth of Employment in India in Recent Years:
It would be better to look at the growth rate of employment both in organised and unorganised sectors in recent years. In an overpopulated country like India with a high rate of growth of population, the rate of growth of population should be consistently higher and steady.
But the rate of growth of employment prevailing in a country like India are not very much conducive and encouraging. Table 12.6 reveals the growth rate of employment during the period from 1972-73 to 1993-94.
Table 12.6 shows that the average annual growth rate of overall employment attained both in organised and unorganised sectors declined continuously from 2.75 per cent during 1972-78 to 1.77 per cent in 1983- 88, but again increased to 2.37 per cent in 1987-94.
The same growth rate again declined to 1.57 per cent during 1993-2000 and then again increased to 2.48 per cent during 1999-2005. However, the annual average growth rate of employment in organised sector maintained its declining trend from 2.45 per cent during 1972- 78 to 1.38 per cent during 1983-88 and then to 1.05 per cent during 1987-94.
The growth rate of employment in the organised public and private sector has declined from 2.99 per cent during 1977-83 to a mere 1.00 per cent during 1987-94. But the growth rate of organised employment in the private sector has initially declined from 1.41 per cent during 1977-83 to 0.43 per cent during 1983-88 but the same rate again increased to 1.18 per cent during 1987-94.
For the first time, the growth rate of employment in the organised private sector exceeded the employment growth rate in public sector. It would also be better to look into the growth rates of employment in India during the post-reform period. Table 12.7 will clarify the position.
Table 12.7 reveals the annual growth rates of employment in the organised public and private sector during 1991 to 1999. It is observed that the growth rate of employment in the public sector has declined from 1.52 per cent in 1991 to 0.60 per cent in 1993 and 0.11 per cent in 1995 and to even (-) 0.09 per cent in 1998 and finally to (-) 0.90 per cent in 2001.
Again the growth rates of employment in the organised private sector increased from 1.24 per cent in 1971 to 2.21 per cent in 1992 and after maintaining a lean period reached the peak level of 5.62 per cent in 1996 and then again maintained a moderate rate of 2.04 per cent in 1997 and then declined to 0.1 per cent in 2001.
Thus the growth rate of employment in the organised sector remained relatively stable i.e., from 1.44 per cent in 1991 to 0.55 per cent in 1995, 1.51 per cent in 1996 and then declined to only (-) 0.6 per cent in 2001. Thus it can be observed that the private sector contributed pre-dominantly to the increase in the organised sector employment in the reform period since 1991 except in 1993.
However, the employment growth in the organised sector, public and private sector confined, declined during the nineties. Annual employment growth in establishments covered by Employment Market Information System of Ministry of Labour decelerated from 1.20 per cent during 1983-1994 to 0.05 per cent per annum during 1994-2008.
This deceleration happened in spite of an acceleration in annual employment growth in the private sector from 0.44 per cent to 1.75 per cent during the reference periods as these acceleration was not enough to make up for the corresponding decline of employment in the public sector from 1.53 percent to (-) 0.65 per cent during the reference period.
Considering the situation, the Government has decided to set up the Second National Commission on Labour with a view to provide protection to millions of workers. The main focus of the Commission would be to suggest rationalisation of the existing labour laws in the organised sector and also to suggest an umbrella legislation for ensuring a minimum level of protection to the workers in the unorganised sector.
In recent years, employment in India has declined marginally in both the urban and rural areas according to the results of the latest survey conducted by the national Sample Survey Organisation (NSSO). The results of the 55th round of NSSO survey revealed that in 1999-2000, employment in rural areas among males was down by two percentage points, while it was lower by three percentage points for females compared to 1993- 94 when the last NSSO survey was conducted.
In urban areas, employment for females decreased by more than one percentage point in 1999-2000, while it remained at the same level for males. The survey brings out that the workforce participation rate during 1999-2000 is higher in rural areas than in urban areas and the participation is higher for males than, females.
Moreover, employment levels among the states reveal that work participation among males in rural areas is highest in Andhra Pradesh which has 605 males employed per 1,000 males, followed by Karnataka and Tamil Nadu. The lowest rates are reported by Haryana with 475 males employed per 1,000 males followed by Uttar Pradesh and Bihar.
The 64th round (2004-08) of NSSO survey on employment-unemployment indicates creation of 4 million work opportunities between 2004-05 and 2007-08.
The employment situation of the country in recent years has been showing marginal improvement. As highlighted in Economic Surveys of previous years based on NSSO data, employment on a current daily status (CDS) basis during 1999-2000 to 2004-05 had accelerated significantly as compared to the growth witnessed during 1993-94 to 1999-2000.
During 1999-2000 to 2004-05, about 47 million work opportunities were created compared to only 24 million the period between 1993-94 and 1999-2000 and employment growth accelerated from 1.25 per cent per annum to 2.62 per cent per annum.
However, since the labour force grow at a faster rate of 2.84 per cent than the workforce, unemployment also rose the incidence of unemployment on CDS basis increased from 7,31 per cent in 1999-2000 to 8.28 per cent in 2004-05.
In recent period, the country in facing sluggish employment growth as there is a deceleration in the compound annual growth rate (CAGR) of employment during 2004-05 to 2011-12 to 0.5 per cent from 2.8 per cent during 1999-2000 to 2004-05 period as against CAGRs of 2.9 per cent and 0.4 per cent respectively in the labour force for the same periods.
After a period of slow progress during 2004-05 to 2009-10, employment generation picked up during 2009-10 to 2011-12 adding 13.9 million persons to the work force, but not keeping pace with the increase in labour force (14.9 persons). Based on current daily status (CDS), CAGR in employment was 1.2 per cent and 2.6 per cent against 2.8 per cent and 0.8 per cent in the labour force respectively for the same periods.’
Employment scenario in India is likely to improve in recent years. Recently, a study conducted by a industry group in December 2013 among more than 5,600 firms across 12 industry sectors. The survey report observed that the job seekers can look forward to a prosperous new year (2014) as more than 8.5 lakh new jobs are expected to be created across various sectors, including FMCG and healthcare.
Coming against the backdrop of uncertain economic conditions, the projected number of new jobs in 2014 is 8.5 lakh which is higher than the estimated 7.9 lakh employment opportunities created in the year 2013. All the opportunities have been projected in for the organised sector.
Besides FMCG, more jobs are expected in healthcare, IT, retail and hospitality sectors. Banking and financial services (61,400), manufacturing and engineering (51,500), education, training and consultancy (42,900), media and entertainment (42,800) and real estate (38,700) are also expected to create job opportunities.
According to the report of the Sixth Economic Census conducted by the National Statistical Commission, the number of employed persons in the country grew by 34.35 per cent to 12.77 crore in eight years period (2005-2013). The growth rate in employment at 34 per cent in eight years period is a good rate as it had grown at an annual rate of over 4 per cent when the population is growing at around 2 per cent.
Employment in urban areas increased by 37.46 per cent to 6.14 crore in 2013 whereas in rural areas the growth was 31.59 per cent to 6.62 crore compared to 2005. The proportion of women in total workforce rose to 25.56 per cent in 2013 from about 20 per cent in 2005.
Taking all these into considerations it can be said that the future employment programmes of the country should be redressed in-such a manner so that it can meet requirements of the people with maximum utilisation of scarce resources. Moreover, considering the depth of the problem it can be safely said that the government cannot tackle this problem alone. Thus private sector should be fully involved in the employment programme of the country.
Accordingly, the Planning Commission should chalk out programme for the private sector in order to involve the sector into the employment generation programme of the country. Thus an appropriate joint strategy involving both the public sector and private sector is to be taken in order to tackle both the rural as well as urban unemployment of the country.
Essay # 9. Is the New Economic Policy Promoting Jobless Growth?
It is a very pertinent question—whether the New Economic Policy is promoting jobless growth in India. In the mean time, various studies have been made in this direction. Some of these studies are pointing affirmative answer to this question and again some other studies are pointing a different answer to this question.
It would be better to start with the following observation of Dr. L.C. Jain, former member, Planning Commission, “The gravest crisis Indian political, economic and social order faces today is in the mounting unemployment. Nothing exposes the barrenness of pure growth rate observed development strategies than the empirical results of the past decade in India. GDP has shot up from 3.5 to 5.3 in the period, but the employment growth rate has fallen from 2.82 during 1973-78 to 1.55 during 1983 to 1987-88. In agriculture, the employment growth rate declined from 1.8 to an insignificant 0.07 in the 15 years period ending 1988.”
Another study made by Mr. Sudipto Mundle of the National Institute of Public Finance and Policy, New Delhi has simply shown the employment effects of New Economic Policy under two different assumptions of a high and a low growth situations.
The study revealed that by 1994, even with the achievement of high growth rate, this stabilisation and structural adjustment programme will increase “unemployment rate from less than 4 per cent in the current year (1991-92) to about 5 per cent in 1992-93. This implies extra unemployment of about 4 million persons in 1992-93 and the year after as a net consequence of stabilisation programme.”
In respect of high growth situation, Mr. Mundle has assumed growth rates of 3.9, 3.0 and 5.7 per cent for 1991- 92, 1992-93 and 1993-94 respectively. But the CSO estimates of GDP growth rates for these three years were—1.1 per cent for 1991-92, 4.0 per cent for 1992-93 and 3.8 per cent (advance estimates) for 1993-94.
Thus it is found that under structural adjustment programme, the actual growth rates of GDP are even lower than the growth rates assumed by Mr. Mundle. Accordingly, it can now be observed that the actual growth rates of unemployment are much higher than the growth rates predicted by Mr. Mundle.
With the introduction of New Economic Policy, the country has initiated the programme of technological upgradation leading to promotion of capital intensive technologies. This has resulted in fall in employment elasticities.
The study made by Mr. B.B. Bhattacharya and Arup Mitra on the employment elasticities of various sectors of the economy, on the basis of the data obtained from 1981 and 1991 censuses revealed that employment elasticity (as measured by the ratio of employment growth rate to income growth rate) of various sectors varied significantly.
Employment elasticity for the economy as a whole was estimated at 0.45 but the employment elasticity of the various sectors were as follows: primary sector—0.74, manufacturing sector— only 0.19, trade and commerce—0.37 and storage and communications-—0.34. But this employment elasticity worked out by Mr. Bhattacharya and Mr. Mitra and the actual observed growth rates of GDP, the probable additions to employment were estimated.
Table 12.8 reveals that the total number of unemployed persons increases sharply from 11 million in 1990-91 to 17 million in 1991-92 and then to 19 million in 1992-93. Accordingly the rate of unemployment increased sharply from 3.1 per cent in 1990-91 to 5.1 per cent in 1992-93. This is no doubt an alarming situation.
Later on, as per NSSO survey it was revealed that the total number of unemployed persons in the country increased from 9.0 million in 1993-94 to 10.5 million in 1999-2000 and then to 13.1 million in 2004- 05. Accordingly, the rate of unemployment also gradually increased from 2.62 per cent in 1993-94 to 2.78 per cent in 1999-2000 and then to 3.06 per cent in 2004-05.
Moreover, in India, the major portion of additional employment generation has come from unorganised sector and the organised sector has a little contribution in this regard. Unorganised sector provided employment at poor wage rates and was also relatively insecure as compared to organised sector.
Besides, the structural adjustment programme introduced in the organised sector has reduced its employment potential leading to retrenchment of workers in the organised sector. This increased the burden of unemployment through displacement of labour. Thus the structural adjustment programme may result in “undue hardships” for the people if implemented unimaginatively.
In India, faster economic growth would not be relevant unless it was job-oriented. India was not for “jobless growth” as it was not conducive to sustained economic development and might lead to social tensions.
The advocates of structural adjustment programme are of the opinion that due to liberalisation, privatisation and globalisation of the economy, there will be increase in the magnitude of unemployment in the short run but with the growing flow of foreign direct investment as well as domestic private investment, employment elasticity of different sectors will improve gradually in recent years.
But with the gradual disinvestment of the public sector and increasing capital intensity of the private corporate sector, chances of acceleration of growth of employment is almost nil. In India, the contribution of the corporate sector in employment generation is very poor.
In the mean time, although the GDP growth rate of the country are increasing gradually from 3.8 per cent in 1993-94 to about 5.5 per cent in 1994-95 but the rate of growth of employment achieved in the country is far from satisfactory.
As per one recent Government report, over 100 million job seekers will seek employment in the country. Therefore, substantial amount of additional employment opportunities per year will have to be generated in the remaining period of the Eighth Five Year Plan to eventually meet the goal of reducing unemployment to “negligible levels” by the year 2002.
But this is really a stupendous task and underscore the necessity of achieving a higher average annual growth rate of the economy than targeted in the Eighth Plan and vigorous pursuit of the employment strategies envisaged in different sectors of the plan.
At the outset of the Eighth Plan in 1992-93, open unemployment was estimated at 17 million, of which the educated accounted for seven million. Severe underemployment was estimated at 6 million. Thus, the backlog of unemployment for plan purposes was thus reckoned at 23 million in April, 1992.
The net additions to labour force during tile Eighth Plan (1992-97) and during 1997-2002 were estimated at 35 million and 36 million, respectively. Thus the total number of people seeking employment will be 58 million during 1992- 97 and a little over 94 million over the 10 year period ending 2002.
At the end of March 1994, there were 37 million job seekers on the live register of employment exchanges in different parts of the country. In order to reduce this extent of unemployment to negligible levels by 2002 A.D., it implies that the employment should grow at the average annual growth rate of 2.6 to 2.8 per cent over this period.
Expansion of employment opportunities is an important objective of the Eighth Five Year Plan and the plan strategy lays emphasis on the faster growth of sectors, sub sectors and areas having employment potential to accelerate the employment growth.
Therefore, the Eighth Plan seeks to achieve 2.6 per cent rate of growth of employment corresponding to an average annual growth of Gross Domestic Product of 5.6 per cent as envisaged in the plan.
A relatively high rate of economic growth combined with a pattern of sectoral growth yielding a higher aggregate employment elasticity will be necessary for achieving the rate of employment growth envisaged. Raising employment in aggregate will require faster growth of sectors, the sub-sectors and the areas which have relatively high employment potential.
This is sought to be achieved by laying emphasis on crop-wise and geographic diversification of agricultural growth, wasteland development for crop cultivation and forestry, promotion of agro-based activities, rural non-farm activities, including rural industries.
It will also include decentralization of the small-scale sector, the urban informal sector and the services sector, expansion of rural infrastructure, housing and health and educational services, especially in rural areas, revamping of the training system and streamlining of the special employment programmes to integrate them with area development plans.
All these sectors and areas are identified as basic elements of an employment growth strategy.
Under the present circumstances, where the organised industry has created no new jobs in the last decade, and budgetary constraints mean that government service has little extra job potential, agriculture alone cannot hold the key to additional job creation.
Rather, a growing body of evidence suggests that labour absorption in agriculture is gradually falling in many areas. In fact, there has been a veritable boom in non- farm employment of rural areas, i.e., in its construction, transport, trade and manufacturing.
Therefore, the major future thrust in additional job creation should probably be neither in agricultural sector nor in industry but in what Prof. R.P. Misra of the Delhi School of Economics termed it “urbanisation”—that indicates the urbanisation in rural areas. Historically, agriculture has resulted about 70 per cent of all jobs.
But in the latest period, 1986-92, for which NSS data are readily available only 11.7 per cent of males and 0.3 per cent of females entering the work force got farm jobs. Most of the remaining part of workforce went into construction, trade and manufacturing.
In 1983-88, about 70 per cent of females entering into workforce in rural areas found jobs in construction works. In the decade ending 1987-88, jobs in farming activities rose by only 0.74 per cent annually, which is barely one-third of the rate of growth of population of the country.
Prof. Shiela Bhalla of Jawaharlal Nehru University has come up with a startling finding that in five states—Uttar Pradesh, Rajasthan, Madhya Pradesh, Bihar and Tamil Nadu, farm employment has been actually falling with the rise in their yield rates.
This type of finding negates the conventional ideas that employment goes on rising with production. These five states account for nearly half of the population of the country. Naturally, it is time for considerable rethinking on agriculture as an avenue of employment.
Prof. Bhalla’s research shows that new technology is not the problem. In more than 90 per cent of cases, farmers started to adopt economizing on labour whenever real wages rose and this so happened whether or not the farmers mechanised their farms.
The most important reason behind such rise in real wages in rural areas is that non- farm jobs are paying much more wages in rural areas, and this has simultaneously drawn labour away from farming and pushed up farm wages significantly.
It is seen from the above observation that the main factor responsible for slow growth of employment is the capital intensive method of production. It is also expected that private participation would give a fillip to the growth of employment in the medium term.
But it is known to everybody that the private investment from Indian Corporate sector or foreign direct investment from multinationals is very much capital-intensive.
Therefore, under such a capital-intensive strategy employment generation at a quicker pace is impossible. Besides, the idea of “growth of employment in the medium term” is also in vogue. Thus under such a situation it is quite necessary to finalize the strategy of growth of employment in the country concretely, otherwise the economy of the country will proceed towards a jobless growth leading to social tensions.
Addressing the fifth conference of the Labour Ministers of non-aligned and other developing countries on January 20, 1995, the then Finance Minister, Dr. Manmohan Singh asserted that the economic reforms unleashed in 1991 had the support of the “broad mass” of population, particularly the labour force, as the Government realised that mass support was the pre-requisite for their success.
Observing that three odd years was too short a period to judge the success of any economic reform programme in such a big and diverse country like India, Dr. Singh said that the positive impact could be gauged from the fact that India was not only able to pull out itself from serious imbalances on financial and external sectors but had embarked on balanced growth on all fronts.
Dr. Manmohan Singh further observed, in this connection, “All our reforms aim at achieving a rapid and sustained growth of output and employment. Liberalization is being pursued keeping in view the comparative advantage the country had in labour-intensive methods of production.”
Therefore, economic reforms which would bring with them modernization, upgradation and introduction of new technologies—might cause some job losses on one hand. On the other, however, job opportunities would expand because of the growth of the economy and fresh investments.
Moreover, higher outlays had been provided in the Eighth Plan in the agriculture, rural development, village and small industries and environment sectors with the aim of providing better job opportunities.
In the meantime, a sign of hope has been noticed. In 1991-92, total employment grew by only 3 million but in 1992-93 and 1993-94 employment increased twice as fast, i.e. 6 million new jobs added each year. The increase is expected to be higher in 1994-95.
As per one recent estimate, new enterprises in India provided 17 million fresh jobs in 2003, the second highest in the world after China where 84 million employment opportunities were created in the new enterprises.
This estimate is made by Global entrepreneurship Monitor report of the London School of Business. According to the report entrepreneurship in India rose marginally in 2003 over the previous year. Nearly 18 per cent of India’s population in the age group of 18 to 64 is engaged in some sort of entrepreneurial activities.
However, downsizing of the government has also created a serious impact on the employment scenario of the country.
As on December, 2003, the central government had identified about 55,000 posts for abolition in various ministries and departments in line with the recommendations of the Expenditure Reforms Commission (ERC) and over 25,000 posts were abolished in different ministries and departments, including Information and Broadcasting and Petroleum.
The ministries and departments concerned identified 24,000 posts for immediate abolition.
Moreover, a wave of Voluntary Retirement Schemes (VRS) and closure of industrial units led to shrink in jobs in the organised sector by over 4.2 lakh in 2001-02. Apart from this, the reduction in jobs in the organised sector has been going on continuously for five years.
While presenting a grim picture of the job scenario in the organised sector, the recent study made by the government says, the total employment in the public sector as on March 31, 2001 was over 277.54 lakh which came down to 273.32 lakh on March 31,2002.
As per the latest quick estimates of employment available with the Directorate General of Employment and Training of the Labour Ministry, though the decline is to the extent of only 1.5 per cent during the prior under review, what is of more concern is the fact that reduction in jobs in the organised sector has been going on continuously five years.
In case of women, the employment in the States and Union Territories during the said period under review fell by 35,000 from 50.71 lakh on March 31, 2001 to 50.36 lakh on March 31, 2002.
The report further observes that with a whopping 97 per cent of the country’s total work force eking out a living in the unorganised sector, the organised sector accounts for a meagre seven per cent of the overall employment in the country.
The reasons cited for the decline in the organised sector jobs include closures of industrial units and a wave of Voluntary Retirement Scheme in an effort to “right size” PSUs. Public sector banks shed over 1.0 lakh jobs between 2000-01 and 2001-02 through VRS. Official figures show that nearly 90,000 employees in various PSUs took VRS in 1999-2000 and 2000-01.
It would be better to look into the estimates of employment generation in India in recent years from the Table 12.9.
The annual percentage increase in total employment registered an increasing trend from 1.00 per cent in 1991-92 to 2.18 per cent in 1992-93 and thereafter registering a decline of 2.29 per cent in 1994-95, the rate of increase in employment further increased to 2.47 per cent in 1996-97.
The Economic Survey, 1995-96 made the following observation in connection with the employment generation during the post-reform era. “By according the highest priority to labour intensive growth in its economic reform policies, the additional employment increased from 3.00 million in 1991-92 to 7.18 million in 1994-95. Additional employment opportunities of the order of 18.48 million were generated during 1992-93 to 1994-95. This implied an average rate of employment growth at 2.03 per cent per annum, which is higher than the annual average rate of employment growth of 1.78 per cent during the preceding seven years (1985-92). These trends are reassuring that the employment content of growth has increased in the process of economic reforms.”
In the mean time, various employment generating schemes have been introduced in India during this period of economic reforms. Now it is to be seen how far all these schemes are implemented properly and can provide additional job opportunities practically.
If all these schemes failed to provide sufficient number of job opportunities then it may lead to a situation similar to “jobless growth” which might lead to social tensions.
Essay # 10. Global Economic Recession and its Impact on Unemployment Problem in India:
After facing the brunt of the Great Depression of 1930, the world economy again started to experience the current recessionary trend in its economic activity since 2007 along with a serious degree of financial turmoil.
The current recession has once again shown its ugly need with a slump in aggregate demand in most of the developed and developing countries of the world especially in industries related to motor vehicles, electronics, consumer durables, textiles, realty sector etc.
The first sign of recession was experienced in USA in December 2007 and that has gradually deepened in US and other countries of the world under the present regime of globalisation.
Indian economy has also started to face the brunt of global recession in 2008-09. As a result, the growth rate attained by the industrial sector has come down from 11.2 per cent in 2006-07 to mere 3.0 per cent in 2008-09. The global recession has seriously affected some of our export oriented industries leading to huge laying off of workers.
India’s export oriented leather industry employing 2.5 million workers would be forced to lay off around 5.0 lakh workers with the worsening scenario in USA and Europe. Similar threat is apprehended in vehicle industry, diamond Jewellery industry, garments industry, readymade garments industry, handicrafts industry etc.
Impact of the economic recession was also felt in terms of job losses in different industries. Industry Department opined the impact of job losses to the extent of over 10.0 lakh in the handicraft sector and another 10.0 lakh in the textile sector in the years that followed.
The Labour Bureau of the Ministry of Labour and Employment conducted a survey on the economic slowdown on employment in India. A sample size of 2581 units taken from eight major sectors, covering 20 centres across 11 states were taken up for the survey.
The survey report reveals that the total employment in all these eight sectors had come down from 16.2 million in September 2008 to 15.7 million by December 2008 showing a total job losses of 5.0 lakh during this three month period.
However, the scenario of lay-offs would be much more serious in the coming months. According to the latest study made by Citigroup, the country does not appear to have remain unscathed from the massive lay-offs witnessed throughout the world and the extent of unemployment could rise further with the home coming of migrant workers or declining remittances from abroad.
The report further stated that although there is a job loss of about 5.0 lakh during the three month period (Oct—Dec. 2008), with export oriented sectors such as genes and jewellery and textiles being most impacted but this statistics only covers the organised sectors which comprises just 10 per cent of the country’s work force close to 385 million.
Although India’s unemployment rate in officially stated at 8.2 per cent but the extent of disguised unemployment prevailing especially in rural areas can magnify the problem into serious proportion.
However, employment opportunities in 2009-10 were affected by the global financial crisis and economic slowdown in India. While comprehensive employment data for the year are not available, some sample surveys conducted by the Labour Bureau, Ministry of Labour and Employment, indicated employment losses in the wake of global financial crisis and economic slowdown.
The Government was concerned about the possible impact of financial crisis on the Indian economy, including employment and several measures, financial and fiscal, were taken. Sample survey of the Labour Bureau indicated job gains in the sectors covered.
Thus, even on the basis of this small sample, estimated employment in the selected sectors had experienced a net addition of 1.51 lakh during the last one year from October 2008 to September 2009. However, the situation has improved in India in recent years due to stimulus packages provided by the government and improvement in global scenario.