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The recent Times of India headline ‘Over 28 million applicants are expected to appear for 90,000 jobs offered by the Indian Railways this year’ essentially captures how dismal citizens are walking pillar to post in search of employment. 

According to the Labour Bureau Statistics, India has become the nation of most unemployed in the world. Unemployment is the biggest challenge in the face of developing India and reflects the socio-economic status of the country. Contrary to government claims, current average unemployment rate is 3.52% and it is expected to inflate if the problem continues to be glossed over as projected by the International Labour Organisation.

It was earlier believed that growth provides all answers to the unemployment issues facing the nation. However, as the sixth largest and the fastest growing economy of the world with a highest seen growth rate of 8.2% in the past two years, as reported by the World Bank data, the Indian economy indicates a healthy performance. However, coupling this with the fact that 30% of India’s working age population (15-29 years) is NEET (Not in Employment, Education or Training), proves that growth and employment do not go hand in hand. This phenomenon is popularly called jobless growth.

Employment often is directly correlated with education in our society. Unfortunately, there is high number of educated unemployed in the country as well.

According to an Economic and Political Weekly paper by Indrajit Bairagya, ‘Why is Unemployment higher among is educated,’ unemployment rate among educated youth in India is higher than their uneducated counterparts and the situation only worsens with increase in education level. This might come as a surprise to many, since it is a generally accepted notion that education gives you the skill to be employed. The truth of the matter however, is that these educated individuals are unemployable rather than unemployed. The defective and rote education system are accused of this disaster. A study conducted by EY for industry lobby group FICCI found that most of our managers and engineers are not equipped to deal with challenges at work. One can therefore conclude that the degree-oriented framework renders itself redundant when it comes to producing human resources adept at fitting into specific profiles in economy.

The jobless growth nurtures sceptics afloat about India not being able to cash-in on its demographic dividend.

Population boom and faulty employment planning are other factors contributing to the grim spectacle of unemployment in the country. The World Bank report reveals that India needs to add 8.1 million jobs every year to keep the employment rate constant, as the working age population is increasing by 1.3 million every month. Though there have been various well-intentioned schemes like start, Make in India, Prime Minister's Employment Generation Programme (PMGEP), Pradhan Mantri Rojgar Protsahan Yojana, and Pradhan Mantri Kaushal Vikas Yojana, there have been major loopholes to counter the battle for jobs. The level of training provided in schemes like Pradhan Mantri Kaushal Vikas Yojana was sub-standard and the government made no concerted effort in this direction. Even when such schemes have been launched in the past, there has been a mismatch between the requirement of industries and the kind of skills imparted to the youth. Recent schemes like Make in India aimed at increasing the share of manufacturing failed to do so primarily because of lack of funding to the local manufacturers, stringent land acquisition laws and inflexible labour regulations, thus making it difficult to attract investors in the manufacturing sector. Post this came Digital India with the aim of increased automation. The rationale behind this initiative was to provide a boost to the online businesses. However, the policy failed to achieve the requisite targets due to poor digital infrastructure and inadequate spectrum. Another failed attempt in a row was the Start-up India initiative. It was a path to tax hell paved with good intentions. In fact, the number of start-ups registered under this scheme fell post this initiative was launched. It also backfired to a certain extent, as people who left their jobs to commence their start-ups were left unemployed when the latter failed.

According to the Indian Labour Report 2015, lack of jobs causes 1.6 crore individuals to enrol in higher education. When the government fails on its part to support the students, these students pursue their PhDs abroad which results in sheer brain-drain. To mitigate the issue, the government should refrain from cutting research grants and reducing PhD seats.

According to the International Labour Organisation, high incidence of informality driven by high shares of agricultural employment heavily contributes to unemployment. This can be judged by the fact that more than half the country is engaged in agriculture which only contributes a minimal 13% to the Gross Domestic Product (GDP) of India. Today, more than half the agriculture devoted area relies on the natural rains. Outdated agricultural infrastructure and its seasonality are factors highlighting the backward nature of the biggest employment sector of the economy. Adding to the long list of reasons for unemployment is the lack of funding and the need to boost self-employment. Unemployment has psychological impacts too. There is a positive correlation between incidence of crime and unemployment. It causes self-deterioration.

To tackle this plague, various initiatives can be taken. Vocational training focusing on increase in job creation by imparting technical skills and increased capital formation is direly needed. In a country where one-third of the population lives below the poverty line, a report by Oxfam reveals that India’s top one percent holds 60% of the nation’s wealth. Inclusive development ensuring that the benefits trickle down to the lower rungs is the key to move forward. A dismal 3.8% of the GDP is spent on education. This needs to be increased if we are to encash our demographic dividend. A careful restructuring in accordance with the demand of the market is needed along with a shift to more practical learning. Online course platforms must be encouraged to bridge the demand supply skill gap. A clear strategic approach needs to be adopted by conducting field studies pan India to understand the labour demand. Post such assessment, schemes need to be initiated. Credible employment-unemployment surveys are needed to assess the current scenario rather than relying on surveys done in a 5-year gap. Manufacturing sector generates 65% of the jobs and hence to relieve the pressure, cottage industries and MSME’s require boost. The policies should complement each other instead of cutting across. A serious agriculture overhaul is needed to move forward. If India wishes to step up in the global prosperity ladder, it must generate salaried jobs, much more than self-employed ones.  Employment generation demands immediate attention if we are to reap the benefits of our demographic dividend. While change is difficult, it is also inevitable.



Nair,V (2017, December 8). Unemployment in India. Digital Learning. Retrieved from http://digitallearning.eletsonline.com/2017/12/unemployment-in-india/

Press Trust of India. (2018, April 16). India must create 8.1 million jobs annually, says World Bank report. The Hindu. Retrieved from https://www.thehindu.com/business/Economy/india-must-create-81-million-jobs-annually-says-world-bank-report/article23561933.ece

Gangopadhyay,J and Kapur,W. (2017, June 13). Unemployment is Up Because 'Make in India', Other Official Schemes Aren't Working. The Wire. Retrieved from https://thewire.in/economy/unemployment-make-in-india-modi-schemes

Mishra,A.R. (2018, February 14). India needs to create more salaried jobs: World Bank. Live Mint. Retrieved from https://www.livemint.com/Politics/8z4W8cGyFp4JTHBiLwqEWN/India-needs-to-create-more-salaried-jobs-World-Bank.html

Anis,J. (2018, April 5). India Is The Nation Of The Most Unemployed In The World: Labour Bureau Statistics. Outlook India. Retrieved from https://www.outlookindia.com/website/story/india-is-the-nation-of-the-most-unemployed-in-the-world-labour-bureau-statistics/310545

Image Credit: The New Indian Express 

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Written By Satchi Kalra

Economics graduate- Delhi University

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