25-December-2023-Special-Article

INDIA’S JOBS CRISIS, THE MACROECONOMIC REASONS

India grapples with a persistent jobs crisis, impacting millions of young, educated individuals unable to secure suitable employment in the formal economy. The Center for Monitoring Indian Economy (CMIE) reports alarming unemployment rates, significantly surpassing global and emerging economy averages. Examining the types of employment, causes of unemployment, and potential solutions becomes imperative in addressing this critical issue.

Types of Employment in India:

Wage Employment:

• Regular Wage Jobs: Formal positions with fixed salaries in government, private, and multinational sectors.
• Casual or Daily Wage Labor: Unstable jobs prevalent in construction, agriculture, and unorganized labor markets.

Self-Employment:

• Entrepreneurship: Individuals engaged in small businesses or enterprises.
• Farmers: Agriculture as a significant source of self-employment.
• Freelancing and Informal Work: Rise of the gig economy with freelancers, consultants, and part-time roles.

Reasons behind Unemployment:

• Stagnant Employment Growth: Salaried workers in non-agricultural sectors experience stagnant growth.
• Disguised Unemployment: High levels of informal employment, reflecting disguised unemployment.
• Labour Demand Determinants: Dependence on output demand and technology affecting labor demand.

Jobless Growth in India’s Case:

Weak and High Responsiveness Scenarios:

• Economies experiencing automation may still witness increased employment with higher GDP growth.
• India exhibits high responsiveness, where GDP growth fails to counteract labor-saving technologies.

Kaldor-Verdoorn Coefficient:

• India’s non-agricultural sector shows a higher coefficient, indicating pronounced jobless growth.

Macroeconomic Policy Frameworks:

• Keynesian Theory: Aggregate demand seen as the binding constraint on employment.
• Mahalanobis Strategy: Capital goods identified as a constraint on output and employment.
• Structuralist Theories: Agrarian and balance of payment constraints debated in Indian policy.

Addressing Unemployment in India:

National Employment Policy (NEP):

• Separate focus on employment needed alongside GDP growth.
• Demand and supply-side components necessary for effective employment policies.

Urban Version of MGNREGA:

• Implementing a scheme for the urban poor to create public assets and services.
• Rajasthan’s introduction of an urban variant as an example.

Increase Industrialization and Agriculture Investment:

• Rapid industrialization can create more jobs and boost productivity.
• Investment in agriculture can generate employment and enhance productivity.

Diversifying Agriculture and Agro-Processing:

• Shift to horticulture, floriculture, and animal husbandry for increased employment.
• Agro-processing industries can reduce wastage and add value, creating more jobs.

Expanding Education and Health Care:

• Investment in human capital through education and health care.
• Reforming the education system and providing vocational training to enhance employability.

Developing Rural Areas and Decentralizing Development:

• Reducing migration pressure on urban areas by developing rural regions.
• Decentralized development for equitable growth, local participation, and empowerment.

Conclusion:

India’s jobs crisis demands a comprehensive approach that extends beyond traditional macroeconomic policies.

The emphasis should be on targeted employment policies, addressing both demand and supply-side challenges. Initiatives like an urban version of MGNREGA, increased industrialization, investment in agriculture, and skill development can collectively contribute to mitigating unemployment. By adopting a multifaceted strategy, India can pave the way for inclusive and sustainable economic growth, providing opportunities for its burgeoning workforce.

Mains Question:

1. Examining the enduring issues of unemployment in India, especially concerning jobless growth, investigate the factors that contribute to the elevated levels of unemployment. (150 WORDS)