Unemployment in India


    In News

    • Recently, the Centre for Monitoring the Indian Economy (CMIE) released data stating that India’s unemployment rate in August 2022 rose to 8.3%.

    Key Findings

    • Highest Unemployment Rate: 
      • This is the highest unemployment rate in the past 12 months. In August 2021, the unemployment rate was 8.35%.
    • Unemployment rate in rural and urban areas:
      • In August, urban unemployment was 9.6% and rural was 7.7%. 
      • Only in two months — February and June — has the rural unemployment rate been higher than the urban unemployment rate.
    • State-wise unemployment rates:
      • There is a significant variance in the unemployment rate across states. 
      • Haryana, J&K and Rajasthan have the highest levels of unemployment rate — each with over 30% of the unemployment rate.
      • In sharp contrast, there are many states with remarkably low unemployment rates as well. 
      • Chhattisgarh has an unemployment rate of just 0.4%. 
      • Maharashtra, Madhya Pradesh, Odisha and Meghalaya — all have unemployment rates well below 3%.
    • Reasons for High Unemployment rate
      • Since the unemployment rate is essentially a ratio between the total unemployed and the total labour force, it can go up whenever the number of unemployed increases more than the increase in the total labour force. 
      • while the labour force increased by 4 million, the economy instead of creating new jobs, actually shed 2.6 million existing jobs.
      • In August while the total number of unemployed went up by 6.6 million, the labour force only went up by 4 million. Hence the spike in the unemployment rate.

    Unemployment Rate

    • About: 
      • The unemployment rate is essentially the percentage of working-age people (15 years and above) who are demanding work but not able to get a job. Both aspects of the definition are important. 
    • Calculation: 
      • It is calculated by looking at all the people of the working age who are demanding work and then finding out what percentage of them are unable to land a job. That percentage is the unemployment rate.
      • Unemployment rate = [Total unemployed / Total Labour Force]
      • In other words, unemployment rates are expressed as a percentage of the labour force, not the total population.
    • Labour Force Participation Rate (LFPR): 
      • The underlying size of the labour force — that is, the percentage of working-age people demanding work — itself varies over time and is measured by the Labour Force Participation Rate (LFPR).

    Challenges/Impacts of Jobless growth 

    • For Working women: 
      • Between 2010 and 2020, the number of working women in India dropped to 19% from 26%, according to data compiled by the World Bank. 
      • CMIE estimated that female labour force participation plummeted to 9% by 2022.
    • Affects Demographic Dividend: 
      • A growing reserve of frustrated, unemployed youth threatens to turn India’s demographic dividend of having a young population into a curse. 
    • Declining Agriculture Employment: 
      • The proportion of Indians employed in agriculture had been falling for decades, but this process flattened some years ago and was reversed by the covid crisis.
      • Those who move out of farming mostly find themselves in low-paying construction work and informal services.
    • Skill shortages:
      • India’s economic growth has been largely services led, with a small pool of skills at the upper end, given a glaring failure in mass education.
      • India presents a paradox of skill shortages while being labour surplus.
      • Trucks are idle because of the shortage of drivers. The steel industry needs more metallurgists. 
      • The healthcare sector is short of nurses and technicians. 
      • The construction sector needs civil engineers, hi-tech welders, bricklayers, and so on. 

    Way Ahead

    • It is the government’s responsibility to take initiative and create adequate roles for unemployed people within the main economy.
    • Government support for enhancing infrastructure is particularly essential for small and medium-sized enterprises.

    Employment Generation Schemes/ Programmes of Government of India

    • Atma Nirbhar Bharat Rojgar Yojana (ABRY) 
      • It was launched with effect from 1st October, 2020 as part of Atma Nirbhar Bharat package 3.0 to incentivize  employers for creation of new employment along with social security benefits and restoration of loss of employment during Covid-19 pandemic.
    • Pradhan Mantri Rojgar Protsahan Yojana (PMRPY)
      • It was launched with effect from 1.4.2016 to incentivise employers for creation of new employment. The beneficiaries registered upto 31st March, 2019 will continue to receive the benefit for 3 years from the date of registration under the scheme i.e. upto 31st March, 2022
    • National Career Service (NCS) Project
      • Project for transformation of the National Employment Service to provide a variety of career related services like job matching, career counselling, vocational guidance, information on skill development courses, apprenticeship, internships etc
    • Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)
      • MGNREGA is to provide at least 100 days of guaranteed wage employment in a financial year to every rural household whose adult members volunteer to do unskilled manual work. 
    • Garib Kalyan Rojgar Abhiyaan (PMGKRA):
      • It is a 125-day Abhiyan launched by Hon’ble Prime Minister on 20th June, 2020 with a mission to address the issues of returnee migrant workers and similarly affected rural population by Covid-19 pandemic through a multi- pronged strategy of providing immediate employment & livelihood opportunities to the distressed, to saturate the villages with public infrastructure and creation of livelihood assets to boost the income generation activities and enhance long term livelihood opportunities by giving focus on 25 works in 116 selected districts across 6 States with a resource envelope of Rs 50,000 crore.
    • Aajeevika – National Rural Livelihoods Mission (NRLM)
      • It was launched by the Ministry of Rural Development (MoRD), Government of India in June 2011. Aided in part through investment support by the World Bank, the Mission aims at creating efficient and effective institutional platforms for the rural poor, enabling them to increase household income through sustainable livelihood enhancements and improved access to financial services. 
    • Pt. DeenDayal Upadhyaya Grameen Kaushlya Yojana (DDU-GKY)
      • The Ministry of Rural Development (MoRD) announced the Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) Antyodaya Diwas, on 25th September 2014. 
        • DDU-GKY is a part of the National Rural Livelihood Mission (NRLM), tasked with the dual objectives of adding diversity to the incomes of rural poor families and cater to the career aspirations of rural youth. The website link for the scheme is
    • PM- SVANidhi Scheme
      • Prime Minister Street Vendor’s  AtmaNirbhar Nidhi (PM SVAN idhi) Scheme since June 01, 2020 to provide collateral free working capital loan to Street Vendors, vending in urban areas, to resume their businesses which were adversely affectedduetoCOVID-19inducedlock-down. 
    • Pradhan Mantri MUDRA Yojana (PMMY)
      • It is a scheme launched by the Hon’ble Prime Minister on April 8, 2015 for providing loans up to 10 lakhs to the non-corporate, non-farm small/micro enterprises. These loans are classified as MUDRA loans under PMMY. These loans are given by Commercial Banks, RRBs, Small Finance Banks, MFIs and NBFCs.
    • Pradhan Mantri Kaushal Vikas Yojana (PMKVY)
      • Pradhan Mantri Kaushal Vikas Yojana (PMKVY) is the flagship scheme of the Ministry of Skill Development & Entrepreneurship (MSDE) implemented by National Skill Development Corporation.
    • Production-Linked Incentive (PLI) Scheme
      • Recently, Finance Minister has announced an outlay of INR 1.97 Lakh Crores for the Production Linked Incentive (PLI) Schemes across 13 key sectors, to create national manufacturing champions and generate employment opportunities for the country’s youth. 

    Source: IE