Why there is unemployment in India?

• At the current rate of population growth, world population by 2000 is expected to reach 7 billion or more, with developing countries accounting for some 5.4 billion, and economically advanced nations accounting for 1.6 billion. Other serious consequences of rapid population growth are maternal death and illness, and physical and mental retardation of children of very poor families.

• A sluggish economic is a state of an economy in which growth is slow, flat or declining. The term can refer to the economy as a whole or a component of the economy, such as weak housing starts, Extended periods of sluggishness can easily lead into a recession, so a sluggish economy is often considered a leading indicator of a potentially steeper downturn.

• We have no funds to invest and to increase our economic growth, which results in unemployment.

Use of inappropriate technology :

• In our Development plans more attention has been given to capital intensive rather than labour intensive technology Which provide more employment.

Backwardness in agriculture:

• The backward nature of our farming results in unemployment because agriculture cannot provide employment opportunities to rural population.

 Small holding :

• Majorly of the agriculture hold small holding i.e 1 or 2 acres. Therefore they cannot employ others.

Immobility of labour:

• People are reluctant to live their native place and relatives which results in unemployment.

 Seasonal nature of agricultural:

• Agricultural labourer do not have work over the year.

 Illiteracy :

• Illiteracy is the one of the main cause of unemployment. They have to go to hard work. Majority of illiterate labourer remain unemployed hall of the year.

• The Indian universities are producing graduates. The system of education does not make the educated fit or employment in industry, Trade, etc.

 Science and Technology :

• Now a day’s science and technology has been tremendously developed. It introduced many new instrument appliances etc. which results in unemployment.

 Modernization :

• Some industries have been trying to reduce cost of production by introducing a measure of modernization.Which results in retrenchment and unemployment.

High rate of taxes:

• The gout imposers taxes an income, Wealth, Excise , custom etc. at a very high rate. Therefore manufactures employ minimum employers and even the citizens cannot start private businesses due to heavy taxes.

 Nehru’s mixed economy :

• Nehru adopted mixed economy in India and also adopted sociology which results in speedy growth of science and technology Which results in unemployment.

Government Policies :

• Government policies showed partiality throughout the public sector. They public enterprises have become monopoly. The private sectors are logging behind and there is failure of employment facilities.

 Inappropriate Jobs :

• Several lakh of people are working in jobs not suitable to their qualification, status , wages etc .

 Unemployment in profession :

• There are several doctors, lawyers, CA’s, engineers etc are remained unemployed due to having no own financial capacity to start their professions.

Work of trade unions :

• Trade union of workers call for strikes, the owners declare lockout and factories are closed for number of days, which results in unemployment.

Inadequate planning :

• The government failed to formulate efficient and adequate planning’s of removal of unemployment.

 Failure in utilization of natural resources:

• The natural resources are not property used.

 Child labour :

• Even though child labours are prohibited to work in agriculture, hotels factories etc. They are working on law wages which results unemployment to youth.

• National Rural Employment Guarantee Act 2005 or NREGA, later renamed as the Mahatma Gandhi National Rural Employment Guarantee Act or MGNREGA in 2009, is an Indian labour law and social security measure that aims to guarantee the 'right to work'.
• This act was passed in 23 August 2005 under the UPA government of Prime Minister Manmohan Singh.
• The Act aims to follow the Directive Principles of State Policy enunciated in Part IV of the Constitution of India. The law by providing a 'right to work' is consistent with Article 41 that directs the State to secure to all citizens the right to work.

Features

• MGNREGA is one of the largest work guarantee programmes in the world.
• Objective: The primary objective of the scheme is to guarantee 100 days of employment in every financial year to adult members of any rural household willing to do public work-related unskilled manual work.
• Legal Right to Work: Unlike earlier employment guarantee schemes, the act aims at addressing the causes of chronic poverty through a rights-based framework.
• At least one-third of beneficiaries have to be women.
• Wages must be paid according to the statutory minimum wages specified for agricultural labourers in the state under the Minimum Wages Act, 1948.
• Demand-Driven Scheme: The most important part of MGNREGA’s design is its legally-backed guarantee for any rural adult to get work within 15 days of demanding it, failing which an ‘unemployment allowance’ must be given.
• This demand-driven scheme enables the self-selection of workers.
• Decentralised planning: There is an emphasis on strengthening the process of decentralisation by giving a significant role in Panchayati Raj Institutions (PRIs) in planning and implementing these works.
• The act mandates Gram sabhas to recommend the works that are to be undertaken and at least 50% of the works must be executed by them.

Challenges

• Inadequate Financing: This year’s allocation is the highest allocation for MGNREGA in any year since the passage of the law.
• However, the allocation amounts to 0.47% of the GDP continues to be much lower than the World Bank recommendations of 1.7% of GDP for the optimal functioning of the programme.
• Due to lack of funds, state governments find it difficult to meet the demand for employment under MGNREGA.
• Delay in Payment of wages: Most states have failed to disburse wages within 15 days as mandated by MGNREGA. In addition, workers are not compensated for a delay in payment of wages.
• This has turned the scheme into a supply-based programme and subsequently, workers had begun to lose interest in working under it.
• Ineffective Role of PRI: With very little autonomy, gram panchayats are not able to implement this act in an effective and efficient manner.
• Large Number of Incomplete works: There has been a delay in the completion of works under MGNREGA and inspection of projects has been irregular. Also, there is an issue of quality of work and asset creation under MGNREGA.
• Fabrication of Job cards: There are several issues related to the existence of fake job cards, the inclusion of fictitious names, missing entries and delays in making entries in job cards.

• In India has roughly 70% of its population living in rural areas. But not enough employment is available for all those living in the rural areas. This leads to unemployment which can take two form.
• Seasonal unemployment: It is depending on climate, the cropping pattern and the socio-economic factors may vary from region to region and even within the same region over different seasons. The agriculturist is not free to accept outside jobs unless they are available during the period of idleness.
• Disguised unemployment: It refers the mass under development rural people with increase in pressure on land more people are engaged in agriculture than necessary.
• In India 80% of total unemployment is rural unemployment and 20% is urban unemployment.

The causes for rural unemployment:-

• Rapidly growing population.
• Slow economic development
• Seasonal nature of Agriculture
•  Joint family system
•  Law of Inheritance
• Social Prestige
•  Unprofitable Agriculture

•  To check the population Growth
• Fast economic growth
• To make production pattern more labour intensive land development and settlement.
•  Reform the land law
•  Promotion of rural social service such as education housing and health services
•  Development of productive activities such as dairy farming, poultry, Farming, Fishing etc.
• Expansion of animal husbandry.
•  Diversification of agricultural production.
•  Urban unemployment in India :
• In India’s unemployment rate in urban areas for all ages was 9.3% in the January. March Quarter of 2019 Compared to 9.9% in the trailing 3 Months periods. Unemployment among those aged between 15-29 years was 22.5% in the quarter ending March 2019 from 23.7% in the preceding quarter.
•  Educated unemployment: The problem of the educated unemployment constitute a very serious problem. Out of total numbers of job seeker, registered with employment exchange, about 50% are educated unemployed. The number of educated job seeker, was increasing at the annual rate of more than 20%. The educated unemployed were 2.44% lakh's in 1951 and they reached to 224 lakhs in 1991.
•  Industrial unemployment: The exact size of the industrial unemployment in India is not known because the necessary data for it’s estimation are not available. During planning period, Industrial sector has expanded and employment in it has slowly increased. During lost 25 years, unemployment in the industrial sector has increased due to failure of small scale and large scale industries.

• Two major sources of data on workforce and employment have been the Decennial Population Census and the nationwide quinquennial (5-yearly) surveys on employment and unemployment by the National Sample Survey Office (NSSO).
• The quinquennial surveys of NSSO provide data for upto 2011-12 only. Hence, it was replaced by the Periodic Labour Force Survey (PLFS), started in 2017-18 on an annual basis.
• PLFS is India’s first computer-based survey launched by the National Statistical Office (NSO) in 2017. It has been constituted based on the recommendation of a committee headed by Amitabh Kundu.
• It collects data on several variables such as the level of unemployment, the types of employment and their respective shares, the wages earned from different types of jobs, the number of hours worked etc.
• PLFS data show an increase in the worker to population ratio (WPR) from 34.7% in 2017-18 to 38.2% in 2019-20.
• This is a reversal of the previous trend which showed a decline in WPR after 2004-05.
• The change also implies that employment has increased at a much faster rate than growth in population.
• The increase in WPR has been reported in the rural and urban population and in the male and female population.
• This increase in WPR is even more significant as it has occurred in the midst of an increase in the labour force participation rate.

• Rethinking Our Economic Development Models: The rising share of industry and services in national income without a sizable increase in employment puts a serious question mark on the relevance of conventional models of economic growth and development.
• Perhaps, there is a need to rethink the conventional economic development models and their applicability for emerging economies like India.
• An optional approach can be to rethink our strategy of striving for an industry-led growth model and explore a more relevant agri-centric model of economic transformation to create more attractive, more remunerative and more satisfying employment in and around agriculture.
• Generating Employment in Manufacturing and Services: There is also an urgent need to generate much more employment in the manufacturing and services sector compared to the number of jobs they have offered in the recent past. This should include:
• Changes in labour laws which discourage industry to adopt labour-intensive production
• Employment-linked production incentives
• Special assistance for labour-intensive economic activities
• Decentralisation of Industries: Decentralisation of Industrial activities is necessary so that people of every region get employment.
• Development of the rural areas will help mitigate the migration of the rural people to the urban areas thus decreasing the pressure on the urban area jobs.

• More Job Seekers than Jobs: PLFS data shows that the number of jobs increased at a faster rate than the increase in the number of job seekers between 2017-18 and 2019-20.
• But despite this, the number of unemployed persons has increased by 2.3 million between 2017-18 and 2018-19, mainly because of an increase in the number of job seekers (52.8 million) in these two years.
• Decline in Salaried Workers: The percentage of salaried people has dropped from 21.2% in 2019-2020 to 19% in 2021, which means that 9.5 million people have left the salariat and become jobless or part of the informal sector.
• No Shift out of Agriculture: The sectoral composition of the workforce shows that 45.6% of the workers in India are engaged in agriculture & allied activities, 30.8% in services and 23.7% in industry.
• From 2017-18 to 2019-20, there has been no increase in the share of industry and services in total employment. This means that the labour shift out of agriculture is not happening.
• Causes of Prevalence of Agricultural Jobs: The young labour force, which is getting increasingly educated, sought more remunerative work outside agriculture but only a few succeeded.
• This is because the industry and services sectors have adopted capital-intensive and, in many cases, labour-displacing technologies and production strategies.
• This is getting further aggravated with the rising adoption of modern technologies like Artificial Intelligence (AI) and Internet of Things (IoT).