Unemployment in India

Readers Question: Suggest how the current economic policy of India has reduced unemployment in the present scenario.

The estimated unemployment rate in India has fallen this year from 8% to 7%. However, it is worth bearing in mind, it is notoriously difficult to measure unemployment in India because of high levels of disguised or ‘under-employment’. Underemployment occurs when people are not classed as being unemployed, but, they make very little from their job.

A particular problem for the Indian economy has been the agricultural sector which has a high % of the workforce but is struggling to create sufficient jobs. This has led to a shift in the working population from rural to urban areas; and there is a difficulty in creating sufficient jobs for this new sector of the population.

Economic Growth and Unemployment

The biggest factor in helping reduce unemployment in India is probably the strong economic growth. India has seen growth rates reach 7%; this increased output is creating new demand. However, economic growth alone cannot solve India’s unemployment problem because the growth tends to benefit some sectors of the economy much more than others. The growth has failed to deal with rural poverty.

Skills and Structural Unemployment

For a developing economy, India has a relatively skilled population. For example, a high % are fluent in English. However, there are still a significant % of the population who lack basic education and skills (especially women). Therefore, to reduce structural unemployment, it is necessary for the Government to improve the quality of education and training, especially in rural areas.

Liberalisation of Markets

The liberalisation of markets has helped economic growth, but, labour still retains inflexibility and some sectors have struggled with the greater liberalisation of markets.