Unemployment in India

July 2nd, 2008 | unemployment -

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.

10 comments ↓

#1 Harmeet singh on 07.10.08 at 7:17 pm

there cant be solution by encouraging only skilled labour. 70% population rely on agriculture and there is lot of disguised unemployment. what if those labour taken out of fields, and them employ in roads contruction work in rular area. by which there marginal output will also increaced.

#2 angel on 08.27.08 at 9:38 am

People are more unemployed in rural areas. Thus government should establish industries in rural areas to decrease unemployment level.

#3 angel on 09.01.08 at 11:23 am

Unemployment can be decreased if some measure are taken to control population level in India.
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Angel

Blazeinfotech

#4 teluguguy on 04.05.09 at 8:24 am

what is the difference between natural rate of unemployment and cyclical employment?

#5 Ritu Raj Kalra on 05.13.09 at 10:44 pm

India’s unemployment can be easily solved if all the politicians who are elected to office are made to work without being paid for their complete tenure as that will make them feel the pinch and empathise with the downtrodden and as such it is necessary that people in India should make their politicians realise that politics is a public service and not a profession.

#6 amish on 05.20.09 at 6:49 pm

unemployment can be control by control on population…………..

#7 PD on 09.19.09 at 7:24 am

Instead of taking an emotional view about unemployment in India, the problem can be better solved by creating more demand in the market which large firms can do and also by raising the level of investment in the country. This needs savings on the part of the people. This will also indirectly help the poor as more investment means more circulation of money in the market which leads to more demand and thus creation of more jobs.
Also, imports are necessary for a country’s economy but India would be better off importing cheaper goods. This will lead to lesser balance payments to other countries and the money could be used for the benefit of our country and the production of capital goods could create if not substantial but at least a certain amount of employment.
Eradicating unemployment is a slow and gradual process and the government and people are doing a commendable job on their part. Maybe the effects are not immediate but it will definitely help the country come out of this problem in time.

#8 NAREN on 09.27.09 at 9:42 am