Jobless Growth in India

In News 

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.

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.