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 roblem in India is not the result of deficiency of effective demand in eynesian term but a product of shortage of capital equipment’s and other complementary resources accompanied by high rate of growth of population.
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.
(ii) Underdevelopment:
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.
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 decentralized 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.
(vii) Decentralisation:
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 ving 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 modernization 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 SSls:
Considering the huge number of unemployed, it is quite important to develop a good number of small scale and cottage industries by adopting labor-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 utilize 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 programmes.
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.
