Jobless Growth in India

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    Recently, Former Reserve Bank of India Governor Raghuram Rajan said that the country’s economic growth for the current fiscal year is “insufficient for the kind of jobs” it needs.

    • A lot of this growth is jobless growth.

    Jobless growth

    • In a jobless growth economy, unemployment remains stubbornly high even as the economy grows. 
      • This tends to happen when a relatively large number of people have lost their jobs, and the ensuing recovery is insufficient to absorb the unemployed, under-employed, and those first entering the workforce.

    Present Status of Jobless growth in India 

    • The unemployment rate in India has been hovering around 7% or 8%, up from about 5% five years ago, according to the Centre for Monitoring Indian Economy.
    • At the same time, the workforce shrank as millions of people dejected over weak job prospects pulled out, a situation that was exacerbated by Covid-19 lockdowns. 
    • The labour force participation rate has dropped to just 40% of the 900 million Indians of legal age, from 46% six years ago, according to the CMIE.
    • Unfortunately, the reality of jobless growth is not reflected in official statistics on unemployment, which are also often dated
      • The latest number is 4.2% on a usual status basis in 2020-21 (July to June), according to the Periodic Labour Force Survey.
      • This captures the chronically unemployed or those who sought or were available for work for the major part of the year. 

    Challenges /Impacts of Jobless growth 

    • India faces a serious challenge of addressing joblessness, the spread, depth and intensity of which is reflected in the violent protests over the Agnipath scheme for armed forces recruitment. 
    • Most Affected 
      • 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.
    • A growing reserve of frustrated, unemployed youth threatens to turn India’s demographic dividend of having a young population into a curse
    • 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.
    • 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, while capital intensity has increased in manufacturing overall in spite of our labour abundance. 
    • 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. 

    Government Interventions 

    • The government is relying on improved welfare delivery to address this vulnerability, as it tries to ramp up local manufacturing through various schemes
    • It is also on a declared course of privatisation that reduces the capacity to absorb surplus labour. 
    • The government has started some new efforts to get data directly from businesses, and is working on more surveys aimed at the so-called informal sector, such as migrant labourers and domestic workers.
    • The government has made efforts to address existing problems. 
      • Its Make in India initiative, for example, has morphed into production-linked incentive schemes for manufacturers. 
    • Pradhan Mantri Mudra Yojana (PMMY)
      • Under the Pradhan Mantri Mudra Yojana (PMMY), banks provide collateral-free loans up to Rs 10 lakh.
        • These loans are given to non-farm small/micro enterprises for income generating activities.
    • Pradhan Mantri Kaushal VikasYojana (PMKVY)
      • It is a flagship program of the Ministry of Skill Development and Entrepreneurship (MSDE) implemented by the National Skill Development Corporation (NSDC). 
      • Under PMKVY, training and assessment fees are paid completely by the Government. Pay-outs are provided to the Training Providers (TPs) in alignment with the common norms. 

    Conclusion and Way Forward 

    • Addressing joblessness requires generating sustainable growth, besides labour reform and incentivising India Inc to invest more to generate employment.
    • To sustain world-beating growth ,the government  needs to ensure there’s a trained workforce for industry to draw on. 
    • For an emerging economy, the path to higher incomes, productivity and growth must lead workers away from farms towards jobs in factories and offices. 
    • Joblessness cannot be addressed without imparting skills that industry or the government requires. 

     

    Mains Practise Question 

    [Q] What are the major factors responsible for Jobless growth in India? Comment on the progress made in India in this regard.