Examine the nature and causes of unemployment in India.
What steps have been taken by the government to solve the Anti poverty measures and Employment Generating programmes are: 1. Integrated Rural Development
problem? Ans: A person having no gainful work even for one hour in a day is described as unemployed for that day. Weekly
Status Approach: This approach highlights the record of those persons who did not have gainful work or were unemployed
even for an hour on any day of the week preceding the date of the survey. The nature of unemployment in under-developed
countries is quite different; it is of chronic and long-term nature. It is now almost universally recognized that the chronic
unemployment and under-employment in less developed countries are not due to the lack of aggregate effective demand
which, according to J.M. Keynes, was responsible for unemployment in developed countries in times of depression. Rather it is
stated to be due to the lack of land, capital and other complementary resources in relation to the total population and labor
force.
Causes of Unemployment in India: The Caste System a) The caste system, a structure of social stratification that can potentially
pervade virtually every aspect of life in India is a major factor in generating unemployment. b) In some locations, certain kinds
of work are prohibited for members of particular castes. This also leads to the result that work is often given to members of a
certain community, rather than to those who truly deserve the job those who have the right skills. c) The result is higher levels of
unemployment.
Inadequate Economic Growth a) Indian economy is underdeveloped and role of economic growth is inadequate. b) This slow
growth fails to provide enough unemployment opportunities to the increasing population. c) This means that as the population
increases, the economy cannot keep up with demands for employment and an increasing share of people are unable to find
work. The result is insufficient levels of employment nationwide.
Increase in Population a) India’s population is predicted to exceed China’s by the year 2024; it will, furthermore, probably be the
most populous country for the entirety of the 21st century. b) As the country’s economic growth cannot keep up with
population growth, this leads to a larger share of the society being unemployed.
Agriculture is a Seasonal Occupation a) Agriculture offers unemployment for a large segment of the population, but only for
several months out of the year. b) The result is that for a considerable portion of the year, many agricultural workers lack
needed employment and income.
Loss of Small-Scale/Cottage Industries a) Industrial development has made cottage and small-scale industries considerably less
economically attractive, as they do not offer the economies of scale generated by large-scale mass production of goods. b)
Oftentimes the demand for cheap, mass-produced goods outweighs the desire for goods that are handcrafted by those with
very specific skill and expertise. c) The result is that the cottage and small-scale industry have significantly declined, and artisans
have become unemployed as a result.
Low Rates of Saving and Investment a) India lacks sufficient capital across the board. Likewise, savings are low and the result is
that investment—which depends on savings—is also low. b) Were there higher rates of investment, new jobs would be created
and the economy would have kick started.
Ineffective (or absent) Economic Planning a) Problematically, there have been no nationwide plans to account for the significant
gap between labor supply (which is abundant) and labor demand (which is notably lower). b) It is crucial that the supply and
demand of labor are in balance, to ensure that those who need jobs are able to get them; otherwise, many individuals will
compete for one job.
Labor Immobility a) Culturally, attachment and maintenance of proximity to family is a major priority for many Indian citizens.
The result is that people avoid traveling long distances from their families in pursuit of employment. b) Additionally, language,
religion, and climate can also contribute to low mobility of labor. c) As one might expect, when many of those who might
otherwise be suited to jobs are unable to travel to reach them, unemployment is magnified.
Job Specialization Jobs in the capitalist world have become highly specialised, but India’s education system does not provide
the right training and specialisation needed for these jobs. Thus many people who are willing to work become unemployable
due to lack of skills.
Lack of essential skilling a) A study reveals that 33% of educated youth in India are unemployed due to a lack of future skills. b)
Millions of students in our country even after finishing schooling remain devoid of hands-on learning and robust practical
knowledge
Economic Growth  Economic Growth is the positive change in the indicators of economy.  Economic Growth
refers to the increment in amount of goods and services produced by an economy.  Economic growth means an
increase in real national income / national output.  It refers to an increase over time in a country’s real output of
goods and services (GNP) or real output per capita income.  Economic growth is single dimensional in nature as
it only focuses on income of the people.  Earlier, economic growth was only measured in terms of Gross
Domestic Product (GDP).  At present, it is measured in terms of GDP, Gross National Income (GNI) and Per
Capita Income.  Economic Growth is the precursor and prerequisite for economic development.  Indicators of
economic growth are GDP, GNI and per capita income.  Economic growth relates a gradual increase in one of
the components of GDP; consumption, government spending, investment or net exports.  It is also considered
as a traditional measure of development which indicates the quantitative rise of economy.  Economic growth
only looks at the quantitative aspect. It brings quantitative changes in the economy.  Economic growth is
concerned with increase in economy’s output.  It focuses on production of goods and services.  Economic
growth is more relevant metric for assessing progress in developed countries.  Economic growth is relatively
narrow concept as compared to economic development.  It is for short term/short period.  It is a
material/physical concept.  Economic growth is measured in certain time frame/period.
Economic Development  Economic development is the quantitative and qualitative change in an economy. 2 
Economic development refers to the reduction and elimination of poverty, unemployment and inequality with the
context of growing economy.  Economic development means an improvement in the quality of life and living
standards, e.g. measures of literacy, life-expectancy and health care.  Economic development includes process
and policies by which a country improves the social, economic and political well-being of its people.  Economic
development is multi-dimensional in nature as it focuses on both income and improvement of living standards of
the people.  Economic development is concerned with the happiness of public life.  Economic development
comes after economic growth. It is a positive impact of economic growth.  Economic development also refers
to:  Provision of sufficient and effective physical and social infrastructures  Equal access to resources 
Participation of all in economic activities  Equitable distribution of dividends of economy.  Economic
development= Economic growth + standard of living  It refers to increase in productivity.  Indicators of
economic development are:  Human Development Index (HDI)  Human Poverty Index (HPI)  Gini Coefficient
 Gender Development Index (GDI)  Balance of trade  Physical Quality of Life Index (PQLI)  Economic
development is the ends of development.  Achieving economic development is linked with end of poverty and
inequality.  It is more abstract concept.  Economic development focuses on distribution of resources.
Sustainability means meeting our own needs without compromising the ability of future generations to meet
their own needs. In addition to natural resources, we also need social and economic resources. Sustainability is
not just environmentalism. Embedded in most definitions of sustainability we also find concerns for social equity
and economic development.
Three pillars of sustainability Environmental Sustainability Ecological integrity is maintained, all of earth’s
environmental systems are kept in balance while natural resources within them are consumed by humans at a
rate where they are able to replenish themselves. Economic Sustainability Human communities across the globe
are able to maintain their independence and have access to the resources that they require, financial and other,
to meet their needs. Economic systems are intact and activities are available to everyone, such as secure sources
of livelihood. Social Sustainability Universal human rights and basic necessities are attainable by all people, who
have access to enough resources in order to keep their families and communities healthy and secure. Healthy
communities have just leaders who ensure personal, labour and cultural rights are respected and all people are
protected from discrimination.
Programme (IRDP): The Integrated Rural Development Programme (IRDP), which was introduced in 1978-79 and
universalized from 2nd October, 1980, aimed at providing assistance to the rural poor in the form of subsidy and
bank credit for productive employment opportunities through successive plan periods. On 1st April, 1999, the
IRDP and allied programmes were merged into a single programme known as Swarnajayanti Gram Swarozgar
Yojana (SGSY). The SGSY emphasizes on organizing the rural poor into self-help groups, capacity-building,
planning of activity clusters, infra-structure support, technology, credit and marketing linkages. 2. Jawahar Rozgar
Yojana/Jawahar Gram Samriddhi Yojana: Under the Wage Employment Programmes, the National Rural
Employment Programme (NREP) and Rural Landless Employment Guarantee Programme (RLEGP) were started in
Sixth and Seventh Plans. The NREP and RLEGP were merged in April 1989 under Jawahar Rozgar Yojana (JRY). The
JRY was meant to generate meaningful employment opportunities for the unemployed and underemployed in
rural areas through the creation of economic infrastructure and community and social assets. The JRY was
revamped from 1st April, 1999, as Jawahar Gram Samriddhi Yojana (JGSY). It now became a programme for the
creation of rural economic infrastructure with employment generation as the secondary objective. 3. Rural
Housing – Indira Awaas Yojana: The Indira Awaas Yojana (LAY) programme aims at providing free housing to
Below Poverty Line (BPL) families in rural areas and main targets would be the households of SC/STs. It was first
merged with the Jawahar Rozgar Yojana (JRY) in 1989 and in 1996 it broke away from JRY into a separate housing
scheme for the rural poor. 4. Food for Work Programme: The Food for Work Programme was started in 2000-01
as a component of EAS full form??. It was first launched in eight drought-affected states of Chhattisgarh, Gujarat,
Himachal Pradesh, Madhya Pradesh, Orissa, Rajasthan, Maharashtra and Uttaranchal. It aims at enhancing food
security through wage employment. Food grains are supplied to states free of cost, however, the supply of food
grains from the Food Corporation of India (FCI) godowns has been slow. 5. Sampoorna Gramin Rozgar Yojana
(SGRY): The JGSY, EAS and Food for Work Programme were revamped and merged under the new Sampoorna
Gramin Rozgar Yojana (SGRY) Scheme from 1st September, 2001. The main objective of the scheme continues to
be the generation of wage employment, creation of durable economic infrastructure in rural areas and provision
of food and nutrition security for the poor. 6. Mahatma Gandhi National Rural Employment Guarantee Act
(MGNREGA) 2005: It was launched on February 2, 2005. The Act provides 100 days assured employment every
year to every rural household. One-third of the proposed jobs would be reserved for women. The central
government will also establish National Employment Guarantee Funds. Similarly, state governments will establish
State Employment Guarantee Funds for implementation of the scheme. Under the programme, if an applicant is
not provided employment within 15 days s/he will be entitled to a daily unemployment allowance. Salient
features of MGNREGA are: I. Right based framework II. Time bound guarantee of employment III. Labour intensive
work IV. Women empowerment V. Transparency and accountability VI. Adequate funding by central government
7. National Food for Work Programme: It was launched on November 14, 2004 in 150 most backward districts of
the country. The objective of the programme was to provide additional resources available under Sampoorna
Grameen Rojgar Yojna. This was 100% centrally funded programme. Now this programme has been subsumed in
the MGNREGA from Feb....... 2, 2006. 8. National Rural Livelihood Mission: Ajeevika (2011) It is the skill and
placement initiative of Ministry of Rural development. It is a part of National Rural Livelihood Mission (NRLM)–the
mission for poverty reduction is called Ajeevika (2011). It evolves out the need to diversify the needs of the rural
poor and provide them jobs with regular income on monthly basis. Self Help groups are formed at the village
level to help the needy. 9. Pradhan Mantri Kaushal Vikas Yojna: The cabinet on March 21, 2015 cleared the
scheme to provide skill training to 1.4 million youth with an overall outlay of Rs. 1120 crore. This plan is
implemented with the help of Ministry of Skill Development and Entrepreneurship through the National Skill
Development Corporation. It will focus on fresh entrant to the labour market, especially labour market and class X
and XII dropouts. 10. National Heritage Development and Augmentation Yojna (HRIDAY): HRIDAY scheme was
launched (21 Jan. 2015) to preserve and rejuvenate the rich cultural heritage of the country. This Rs. 500 crore
programme was launched by Urban Development Ministry in New Delhi. Initially it is launched in 12 cities:
Amritsar, Varanasi, Gaya, Puri, Ajmer, Mathura, Dwarka, Badami, Velankanni, Kanchipuram, Warangal and
Amarvati. These programmes played/are playing a very crucial role in the development of the all sections of the
society so that the concept of holistic development can be ensured in the real sense.
Economic Factors in Economic Development: 1) Capital Formation: The strategic role of capital in raising the level of production
has traditionally been acknowledged in economics. It is now universally admitted that a country which wants to accelerate the
pace of growth, has m choice but to save a high ratio-of its income, with the objective of raising the level of investment. Great
reliance on foreign aid is highly risky, and thus has to be avoided. Economists rightly assert that lack of capital is the principal
obstacle to growth and no developmental plan will succeed unless adequate supply of capital is forthcoming. Whatever be the
economic system, a country cannot hope to achieve economic progress unless a certain minimum rate of capital accumulation
is realized. However, if some country wishes to make spectacular strides, it will have to raise its rate of capital formation still
higher. 9 Improvements and increased investment in physical capital – such as roadways, machinery and factories – will reduce
the cost and increase the efficiency of economic output. Factories and equipment that are modern and well-maintained are
more productive than physical labor. Higher productivity leads to increased output. Labor becomes more productive as the ratio
of capital expenditures per worker increases. An improvement in labor productivity increases the growth rate of the economy. 2)
Natural Resources: The principal factor affecting the development of an economy is the natural resources. Among the natural
resources, the land area and the quality of the soil, forest wealth, good river system, minerals and oil-resources, good and
bracing climate, etc., are included. For economic growth, the existence of natural resources in abundance is essential. A country
deficient in natural resources may not be in a position to develop rapidly. In fact, natural resources are a necessary condition for
economic growth but not a sufficient one. Japan and India are the two contradictory examples. According to Lewis, “Other
things being equal man can make better use of rich resources than they can of poor”. In less developed countries, natural
resources are unutilized, under-utilized or mis-utilized. This is one of the reasons of their backwardness. This is due to economic
backwardness and lack of technological factors. According to Professor Lewis, “A country which is considered to be poor in
resources may be considered very rich in resources some later time, not merely because unknown resources are discovered, but
equally because new methods are discovered for the known resources”. Japan is one such country which is deficient in natural
resources but it is one of the advanced countries of the world because it has been able to discover new use for limited
resources. 3) Marketable Surplus of Agriculture: Increase in agricultural production accompanied by a rise in productivity is
important from the point of view of the development of a country. But what is more important is that the marketable surplus of
agriculture increases. The term ‘marketable surplus’ refers to the excess of output in the agricultural sector over and above what
is required to allow the rural population to subsist. The importance of the marketable surplus in a developing economy
emanates from the fact that the urban industrial population subsists on it. With the development of an economy, the ratio of
the urban population increases and increasing demands are made on agriculture for foodgrains. These demands must be met
adequately; otherwise the consequent scarcity of food in urban areas will arrest growth. In case a country fails to produce a
sufficient marketable surplus, it will be left with no choice except to import food-grains which may cause a balance of payments
problem. Until 1976-77, India was faced with this problem precisely. In most of the years during the earlier planning period,
market arrivals of food-grains were not adequate to support the urban population. If some country wants to step-up the tempo
of industrialization, it must not allow its agriculture to lag behind. The supply of the farm products particularly food-grains, must
increase, as the setting-up of industries in cities attracts a steady flow of population from the countryside. 10 4) Conditions in
Foreign Trade: The classical theory of trade has been used by economists for a long time to argue that trade between nations is
always beneficial to them. In the existing context, the theory suggests that the presently less developed countries should
specialize in production of primary products as they have comparative cost advantage in their production. The developed
countries, on the contrary, have a comparative cost advantage in manufactures including machines and equipment and should
accordingly specialize in them. In the recent years, a powerful school has emerged under the leadership of Raul Prebisch which
questions the merits of unrestricted trade between developed and under-developed countries on both theoretical and empirical
grounds. Foreign trade has proved to be beneficial to countries which have been able to set-up industries in a relatively short
period. These countries sooner or later captured international markets for their industrial products. Therefore, a developing
country should not only try to become selfreliant in capital equipment as well as other industrial products as early as possible,
but it should also attempt to push the development of its industries to such a high level that in course of time manufactured
goods replace the primary products as the country’s principal exports. In countries like India the macro-economic
interconnections are crucial and the solutions of the problems of these economies cannot be found merely through the foreign
trade sector or simple recipes associated with it. 5) Economic System: The economic system and the historical setting of a
country also decide the development prospects to a great extent. There was a time when a country could have a laissez faire
economy and yet face no difficulty in making economic progress. In today’s entirely different world situation, a country would
find it difficult to grow along the England’s path of development. The Third World countries of the present times will have to
find their own path of development. They cannot hope to make much progress by adopting a laissez faire economy. Further,
these countries cannot raise necessary resources required for development either through colonial exploitation or by foreign
trade. They now have only two choices before them: i) They can follow a capitalist path of development which will require an
efficient market system supported by a rational interventionist role of the State. ii) The other course open to them is that of
economic planning. The latest experiments in economic planning in China have shown impressive results. Therefore, from the
failure of economic planning in the former Soviet Union and the erstwhile East European socialist countries it would be wrong
to conclude that a planned economy has built-in inefficiencies which are bound to arrest economic growth.