MODERN INDIAN SCHOOL

Kathmandu, Nepal

ECONOMICS PROJECT ON
PROBLEMS OF UNEMPLOYMENT
IN INDIA
For Academic Session 2021-2022

Submitted By: Submitted To:

Manasi Maity Mr. Binod Poudel
Class – 12 Sec – C
Roll No. : 12205
 MODERN INDIAN SCHOOL
Kathmandu, Nepal

CERTIFICATE OF MERIT
This is to certify that Ms. Manasi Maity of class 12 Section “C” has
successfully completed Eoconomics Project under my supervision
according to Guidelines issued by C.B.S.E. for academic session 2021 /
2022 .

………………… ………………….... ………………………

Principal External Mr.Pankaj Sharma
Col.(Retd) Raju Peter HOD. Economics
 ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to our

principal Col.(Retd) Raju Peter as well as our Academic
coordinator Ms. BibhaLal , and our Economics subject teacher
Mr. Binod Poudel, and CBSE board who gave me the golden
opportunity to do this wonderful project on the topic Problem of
Unemployment in india , which also helped me in doing a lot of
research and I came to know about so many new things. I am
really thankful to them.

Secondly, I would also like to thank my parents and friends who

helped me a lot in finalizing this project within the limited time
frame.

Regards,

Manasi Maity

12 ‘C’
 INDEX

S.
No Topic
1. INTRODUCTION

2. OBJECTIVES

3. TYPES OF UNEMPLOYMENT
4. CURRENT SCENARIO OF UNEMPLOYMENT IN INDIA

5. GOVERMENT INITIATIVES AND POLICY MEASURES

6. CONCLUSION

7. RECOMEDATIONS

8 LIMITATIONS

9. BIBLIOGRAPHY

Introduction
Unemployment is characterized as a phenomenon where labourers who are
equipped for working and ready to work, don't look for some kind of
employment. It is communicated as a proportion of the complete number of
jobless people to the all out work power. In India, the National Sample Survey
Organization (NSSO) and the Labor Bureau compute work and joblessness.

India has the biggest extent of youth populace on the planet (Economic Times,
2014). The joblessness rate in the 18–29 age bunch in 2015 was 13.2%. A huge
number of youth enter the activity advertise each year. Nevertheless, as
indicated by the NSSO finance information, work creation eased back
somewhere around 6–7% in January 2019 when contrasted with the earlier year.
This has unfavorably affected the work possibilities of youth. The
Unemployment rate is
evaluated at 6.1% for 2017–
18, the most noteworthy
over the most recent 45
years. This mirrors a
vocation emergency and a
bungle of qualified ability
and accessible business
openings.

The issue of joblessness has

been developing since
Independence, and particularly so for the adolescent. In 2015, over 30% of
India's childhood was neither utilized nor in instruction nor preparing, perhaps
do the most noteworthy rate on the planet

While the definition of unemployment is clear, economists divide

unemployment into many different categories. The two broadest categories of
unemployment are voluntary and involuntary unemployment. When
unemployment is voluntary, it means that a person has left their job willingly in
search of other employment. When it is involuntary, it means that a person has
been fired or laid off and must now look for another job.
In addition to theories of unemployment, a few categorisations of
unemployment are used for more precisely modelling the effects of
unemployment within the economic system. Some of the main types of
unemployment include structural unemployment frictional
unemployment cyclical unemployment involuntary unemployment and classical
unemployment.

Structural unemployment focuses on foundational problems in the economy

and inefficiencies inherent in labor markets, including a mismatch between the
supply and demand of laborers with necessary skill sets. Structural arguments
emphasize causes and solutions related to disruptive technologies
and globalization Discussions of frictional unemployment focus on voluntary
decisions to work based on individuals' valuation of their own work and how
that compares to current wage rates added to the time and effort required to find
a job. Causes and solutions for frictional unemployment often address job entry
threshold and wage rates.
 OBJECTIVES

 To examine the current scenario of unemployment in India.

 To analyze the government initiatives for reducing unemployment.
 To suggest ways to reduce unemployment.
 List and describe the three major economic goals.
 Define the unemployment rate and the labor force participation rate and
understand how they are computed.
 Identify and discuss the different types of unemployment.
 Describe the different reasons for unemployment.
 Explain how we measure the inflation rate and why inflation is a problem.
 Explain and discuss economic fluctuations.
 To Study the historical trends of Unemployment rate and related macro –
economic variables and factors
 To relate these trends to the current scenario and find point of similarities
and differences
 To find the reasons and coming up with feasible solution to improve the
present situation
 To Study the historical trends of Unemployment rate and related macro –
economic
 • To find the reasons and coming up with feasible solution to
improve the present
Several factors have contributed to the unemployment problem in
India:

• High population growth

• Slow rate of economic progress

• Joint family system,

• Onset of technology ,

• Caste system,

• Prevalence of agriculture

• Fall of cottage and small industries

• The slow growth of industrialization

• Shortage of electricity, coal and raw materials in India.

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 labour resources.

1.2. Types of Unemployment

2. Open Unemployment:
It is the most legitimately perceptible joblessness situation by perception, it
happens when the accessible no. of employments are not ready to take into
account the populace. This sort of joblessness can be seen and included as
far as the number of jobless people. The work power extends at a quicker
 rate than the development pace of the economy. Hence, not all individuals
land positions.

3. Disguised Unemployment:
A larger number of individuals are doing work than really required in a
circumstance. Regardless of whether some are pulled back, generation
doesn't endure. At the end of the day, it alludes to a circumstance of work
with surplus work power in which a few specialists have zero minor
efficiencies.

4. Seasonal Unemployment:
The joblessness happens during specific periods of the year. In certain
enterprises and occupations like agribusiness, occasion resorts, ice plants
and so forth., generation exercises occur just in certain seasons. So they offer
work for just a specific timeframe in a year. Individuals occupied with such
kind of exercises may stay jobless during the off-season.

5. Cyclical Unemployment:
It is brought about by profession cycles at customary interims. For the most
part entrepreneur economies are liable to exchange cycles. The downswing
in business exercises brings about joblessness. Repetitive joblessness is
regularly a shot-run wonder.

6. Educated Unemployment:
Among the informed individuals, aside from open joblessness, many are
underemployed in light of the fact that their capability doesn't coordinate the
activity. Flawed instruction framework, mass yield, an inclination for
clerical occupations, absence of employable abilities and decreasing formal
salaried occupations are predominantly answerable for joblessness among
taught young people in India
7. Structural Unemployment:
This kind of joblessness emerges because of radical changes in the
monetary structure of a nation. These progressions may either influence the
inventory of a factor or interest for a factor of generation. Basic business is a
characteristic result of financial improvement and mechanical progression
and advancement that are occurring quickly everywhere throughout the
world in each circle.

8. Chronic Unemployment:
The  means prolonged unemployment in the economy. In other words,
chronic unemployment is caused due to the long-term unemployment
persisting in the economy .In the event that joblessness keeps on being a
long haul highlight of a nation, it is called incessant joblessness. The fast
development of
 populace and lacking degree of financial improvement on account of an
endless loop of neediness are the primary drivers for constant joblessness.
\

9. Frictional Unemployment:
Frictional joblessness is caused because of inappropriate alteration between
the supply of work and interest for work. This kind of joblessness is because
of the fixed status of work, absence of right and convenient data, occasional
nature of work. Frictional unemployment is the result of voluntary
employment transitions within an economy. Frictional unemployment
naturally occurs, even in a growing, stable economy. Workers choosing to
leave their jobs in search of
new ones and workers
entering the workforce for the
first time constitute frictional
unemployment.

CURRENT SCENARIO OF UNEMPLOYMENT IN INDIA

As noted earlier any vision of the future has to be rooted in the current reality and
policies and processes have to be identified to bridge the gap between the current
reality and the future vision. It is , therefore, essential to have an understanding of
the broad employment picture as it exists today, which would also indicate the
directions for improvement in future. Some aspects of the current employment
scenario are listed below –
 7.32 % of the labour force, in the year 1999-2000, was unemployed. In
absolute terms the number of unemployed stood at 26.58 million. ™
 Since the above estimates are on Current Daily Status basis, the number of
unemployed also includes the number of those who are underemployed in
terms of underutilization of the labour time. But it excludes such
underemployed who are working at very low levels of income and
productivity.

 Among
the employed,
the proportion
of poor is as
high as in the
population
at large,
 suggesting a large proportion of workers engaged in subsistence
employment. ™
 Only about 8 % of the total employment is in organized sector. More than
90 % are engaged in informal sector activities, which is, largely outside the
reach of any social security benefits and also suffers from many handicaps in
form of limited access to institutional facilities and other support facilities.
 ™ The educational and skill profile of the existing workforce is very poor.

GOVERNMENT INITIATIVES AND POLICY MEASURES

Government of India has taken several policy measures to fight the problem of
Unemployment. Some of the measures are as follows:-

Mahatma Gandhi National Rural Employment Guarantee Act

(MGNREGA): was enacted by the Central Government in 2005, aimed at
improving living standards of the rural poor and providing social security to them
by giving the adult members of every household at least one hundred days of
guaranteed wage employment of unskilled manual work in a financial year. The
Act succeeded in generating employment in more than 300 districts since it was
launced. In the financial year 2013-14, 3,81,26,455 households provided
employment.3 Besides all these achievements there are many issues faced by the
government which are
related to this scheme. In
April 2011, the Central and
the State Level revised the
policy and concluded that
the budget of Rs.40,000
crore could have been
utilized more efficiently
with effective planning for
curbing unemployment.
Schedule one of this Act
focuses on conservation of natural resources but evidences showed the destruction
of natural resources in some areas where contracting was allowed and machinery
were involved. To add on to it, the lack of adequate administration and technical
knowhow at Block and Gram Panchayat has adversely affected the preparation of
plan, security, appropriate monitoring and measurement of work. With proper
implementation of this policy, the rate of employment generation could have been
higher as compared to the four fold increase in the budget for this scheme since
2005.

Regional Rural Banks (RRBs): were established in 1975 with a view to

develop the rural economy and to create a supplementary channel to the
'Cooperative 3 For detailed description refer nrega.nic.in Credit Structure' in order
to enlarge institutional credit for the rural and agriculture sector.4 The RRBs
mobilize deposits primarily from rural/semi-urban areas and provide loans and
advances mostly to the rural inhabitants. RRBs encourage entrepreneurship by
giving credits in concessional rates. This increases the sense of security to the new
entrepreneurs. RRBs also spruce the rural economy. However, some issues were
observed in the implementation of this scheme. There are many restrictions in the
credit policies which seemingly discourage the rural population to deal with these
banks. These banks also follow strict and complicated procedure in deposits and
advancing loans which is difficult for these people to understand and undertake.
Thus the very purpose of employment generation has been compromised.

Ministry of Micro, small and medium enterprises (MSME): is

regarded as the engine of economic growth and development. In India it has played
a key role in generating job opportunities and promoting self-employment. MSME
Act 2006 facilitates the development of both manufacturing and service sector and
also enhances their competitiveness. They are spread across the country and boost
the manufacturing of many products thus promoting entrepreneurship and also
provide services to meet the local market needs. It is found that since they have
limited financial resources they are unable to hire skilled and specialized
workforce. This hinders technological advancement and expansion of the
enterprise. Moreover these industries do not develop the skill set of the employed
unskilled workforce thereby keeping their employability low.

National Skill Development Mission: was initiated after the Twelfth

Five Year Plan emphasized on bridging the skill deficit needed for jobs. This
programme aims to skill 500 million people by the year 2022. The Prime
Minister’s National Council of Skill Development was set up as an apex
organization to frame policies, give directions and provide vocational training
in schools. To promote skill development in rural areas, Apprenticeship
Training Scheme (ATP), Vocational Training Providers (VTP) and many other
programmes were undertaken. Government has also decided to transform
Public Employment Exchanges into Career Centers to provide guidance and
career counselling to young people. National Multi-Skill programme called
Skill India has been launched which focuses mainly on entrepreneurial skill
development.

The skill challenge becomes acute for India considering that the country has a
large portion of its population below 25 years of age. Currently a major
proportion of this population is not productively engaged in economic activities
due to a ‘skills versus jobs requirement’ mismatch which leads to economically
inactive working age group people affecting the economy and increasing
unemployment.

Swarna Jayanti Shahari Rozgar Yojana (SJSRY):was launched in

1997 for urban poverty alleviation. The target population is the urban poor
living below the poverty line. The key objective of the Scheme is to provide
gainful employment to the urban unemployed through the setting up of
selfemployment ventures or provision of wage employment. Studies show that
the training programmes for beneficiaries were organized by NGOs and other
institutions which were not recommended in the SJSRY guidelines. Thus it is
evident that this policy has been unable to generate the required level of
employment due to several drawbacks.
Government policies and other factors adding to
unemployement

• Global protectionist policies, rising price of crude oil, geopolitical

tensions, unanticipated Supreme Court interventions, and unforeseen
market- forces due to innovations have caused unprecedented disruptions
that guzzled- up the most well run corporates with ferocity, eroding
profitability and the potential to generate

a. Real Estate - Real Estate division is a key driver of Employment and

work, and spikes retail acknowledge offtake, as additionally has a
multiplier factor because almost 200 sub-ventures feed off it.
Manufacturers are largely to fault for oneself dispensed obligation
emergency that has prompted stock develop and failure to finish ventures
in light of the fact that deceitful manufacturers and designers abused
homebuyer’s assets and bank advances.

b. Aviation Industry - The Aviation Industry directly gives work to more

than 2.2 lakh individuals. In spite of sound traveler traffic developing at
21%, the industry cannot raise tolls because of extraordinary challenge
and make an interpretation of the development to returns that are more
significant. Open area Air India has stayed in the red with an obligation of
about Rs 52,000 crore without any takers for its deal, even the private
division Jet Airways which is the second-biggest transporter has revealed
an astounding loss of Rs 1040 crores.

c. Telecom Industry - Telecom part has additionally negatively affected

more established players like Airtel, Vodafone and Idea Cellular because
of Reliance Jio's ruthless valuing.
 Telecom segment, which contributes 7per penny to the nation's GDP, and
gives work to 4,000,000 individuals has seen net incomes stressed
because of proceeded with descending modification

d. Banking Sector - Nationalized banks are among the greatest activity

makers, however have been assailed by inheritance issues from most
recent 15 years, as gross NPA's of 19 nationalized banks have expanded
by 33 percent over the past financial, with the biggest bank, SBI, having
revealed its hugest ever quarterly loss of Rs 7,718 crore. 63.3 % of the
defaulters are of agro and SMMEs birthplace

e. Supreme Court's decisions on telecom wireless transmissions, mining and

coal assignment cases through which licenses were dropped all at once
because of lawless acts, as additionally the zenith courts restriction on
alcohol distributes on national interstates which has affected
employments.

Conclusion
• The rate of unemployment has reached at 7.7 in the last month , with youth
unemployment at 10.41 percent

• The reasons for this drastically high rate is a combination of poorly executed
government policies and the international economic environment

• Also added to these are the lack of in- demand skills , proper education facilities
and poor efficiency of workers

• The negative sentiments of consumers regarding major markets like automobile

and real estate is also a major concern for reducing the jobs in private sectors

• Also , the people are choosing to save rather than invest or expend which is
resulting in the reduction in consumption pattern

• The reliance of industries on AI and automation is another factor for layoffs and
lesser job vacancies

• Also there is a severe shortage of government professionals including 5 lakh

teachers, 2 lakh police personnel , 4000 Judges and over 2.2 Lakhs Doctors

Recommendations
1. Change in industrial technique:
• Production technique should suit the needs and means of the country. It is
Important that labour intensive technology should be encouraged in place of
capital-intensive technology.

2. To reduce Seasonal Unemployment in Agriculture

• Agriculture should have multiple cropping

• Mixture of plantations, horticulture, dairying and animal husbandry should be

encouraged

3. Change in education system:

• Educational pattern should be changed. Students who have liking for higher
studies should be admitted in colleges and universities.

• Emphasis should be given on vocational education. Qualified engineers should

start their own small units.

4. Proper assistance to SMMEs should be reinforced

• They are engaged in agriculture, trade, cottage and small scale industries etc.

• These persons should be helped financially, providing raw materials and

technical training.

5. More regulations on sectors like banking and real estate

• These sectors form the core of the economy and need proper vigilance and
governance

Limitations
• Repeated in accuracies in published data due to nulls and blanks
• Access restricted to advanced databases due to lack of subscription

• Survey data is not the most reliable source for performing statistical analysis

• Lack of proper equipment for processing large amounts of data

• Not all variable available at the databases

Bibliography
• Devarajan, S., Rodrik, D., 1991. Pro-competitive effects of trade reforms: results
from a CGE model of Cameroon. European Economic Review 35 (5), 1157–1184.

• Dutt, P., Mitra, D., Ranjan, P., 2009. International trade and unemployment:
theory and cross-national evidence. Journal of International Economics 78 (1),32–
44.

• Dyson, T., Cassen, R., Visaria, L., 2004. Twenty-first Century India: Population,
Economy, Human Development, and the Environment. Oxford University
Press,Delhi.

• Felbermayr, G., Prat, J., Schmerer, H., 2008. Globalization and Labor Market
Outcomes:

• Wage Bargaining, Search Frictions, and Firm Heterogeneity. IZA Discussion

Papers 3363. Institute for the Study of Labor (IZA).

• Freund, C. and Pierola, M.D. (2009). “Export Entrepreneurs: Evidence from

Peru.”