• UGI USER
  • Jun 21, 2024
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ECONOMIC GROWTH VS. EMPLOYMENT IN INDIA: A COMPLEX RELATIONSHIP

Syllabus:

  • GS-3- Economic and job opportunities in India ,Jobless growth , Entrepreneurship and solutions

Focus :

  • This article explores the paradox of India’s economic growth without a corresponding increase in employment. It delves into the underlying reasons behind this phenomenon, the impact on various sectors, and potential strategies for creating sustainable and inclusive job opportunities.
Source - ET

Introduction

  • India’s GDP has been growing steadily, yet this growth has not translated into a significant increase in employment.
  • As the nation enters the next phase of its demographic shift, with a projected working-age population increase to 60% by 2041, generating adequate and quality jobs becomes crucial.

Reasons for Jobless Growth

Man vs. Machine

  • Capital-intensive development reduces the need for human labor.
  • The ILO’s ‘India Employment Report 2024’ highlights joblessness among highly educated youth.
  • Many educated individuals are unwilling to accept under-remunerated jobs, aspiring for better prospects.

Services Sector Limitations

  • The services sector cannot create as many jobs as manufacturing or agriculture.
  • Large firms in the service sector drive productivity but not job creation.
  • Small firms dominate employment but offer limited growth opportunities.

Sectoral Imbalance

  • Agriculture employs over 45% of the workforce but contributes less than 20% to GVA.
  • Slow shift from agriculture to industry hampers overall employment growth.

Employment Trends and Challenges

Employment Growth Stagnation

  • Between 2000 and 2012, employment grew at an annual average of 1.6%, while GVA increased by 6.2%.
  • From 2012 to 2019, minimal employment growth occurred despite a 6.7% GVA growth.

Low Labour Force Participation Rate (LFPR)

  • India’s LFPR is significantly low, especially for women and less-skilled workers.
  • Barriers for entry into the labor force remain high.

Unemployment Among Educated Youth

  • Unemployment rates for graduates (13.4%), diploma holders (12.2%), and postgraduates (12.1%) are alarmingly high.
  • In contrast, the illiterate population has negligible unemployment.

Rise of the Informal Sector

  • Increased self-employment indicates job creation primarily in the informal sector.
  • Jobs in the informal sector are often insecure and offer poor working conditions.

Sectoral Analysis

Agriculture

  • Remains a major employer but with low productivity and contribution to GVA.
  • Structural issues prevent efficient sectoral transformation.

Industry

  • Potential for job creation exists but remains untapped due to slow industrial growth and low labor mobilization.

Services

  • Dominates GVA contribution but falls short in employment generation.
  • Large firms in the sector fail to create enough jobs, leaving many workers in small, stagnant firms.
Schemes by Government of India :

Startup India Initiative-

  • To build a strong ecosystem for nurturing innovation and startups in the country.
  • Simplified process for setting up startups, including an easy registration process through a mobile app.
  • Tax exemptions for three years and on capital gains.
  • A dedicated Startup India Hub to assist startups with resources and guidance.
  • Fast-track patent application and reduced costs for intellectual property rights.
  • Fund of Funds for Startups (FFS) with a corpus of INR 10,000 crore to provide funding support.

Pradhan Mantri Mudra Yojana (PMMY)

  • To provide financial assistance to small and micro-enterprises.
  • Offers loans up to INR 10 lakh under three categories: Shishu (up to INR 50,000), Kishore (INR 50,000 to INR 5 lakh), and Tarun (INR 5 lakh to INR 10 lakh).
  • Aims to provide easy access to credit for non-corporate, non-farm small/micro enterprises.
  • Encourages financial institutions to extend loans to the Micro, Small, and Medium Enterprises (MSME) sector.

Atal Innovation Mission (AIM)

  • To create and promote a culture of innovation and entrepreneurship across the country.
  • Establishment of Atal Tinkering Labs (ATLs) in schools to foster curiosity and innovation in young minds.
  • Support for the creation of Atal Incubation Centers (AICs) that provide necessary infrastructure and support to startups.

Stand-Up India Scheme

  • To promote entrepreneurship among women, Scheduled Castes (SC), and Scheduled Tribes (ST).
  • Provides bank loans ranging from INR 10 lakh to INR 1 crore to at least one SC/ST borrower and one woman borrower per bank branch.
  • Aims to facilitate at least two such projects per bank branch for setting up greenfield enterprises.
  • Loans can be used for setting up new enterprises in manufacturing, services, or trading sectors.
  • Extensive handholding support and guidance for borrowers.

Strategies for Enhancing Employment

Diversified Job Creation

Focus on creating job opportunities across various sectors, including services, manufacturing, and agriculture.

Encourage sectors with high job-creating potential to expand.

Entry-Level Opportunities

  • Reduce barriers for low-skilled workers and women to enter the labor force.
  • Promote policies that facilitate easy access to jobs for marginalized groups.

Higher-Productivity Roles

  • Develop roles that capitalize on India’s competitive advantages.
  • Invest in sectors with emerging opportunities to create high-quality jobs.

Educational System Restructuring

  • Align educational curricula with market needs.
  • Ensure that the education system equips young people with relevant skills.

Policy and Infrastructure Support

  • Strengthen policy frameworks to support job creation.
  • Develop infrastructure that facilitates business growth and employment.

Conclusion

  • Unlocking India’s workforce potential through competitive job opportunities is essential for inclusive and prosperous growth.
  • As India aims to become a global economic powerhouse, it must address the challenges of jobless growth by implementing strategic measures to generate sustainable and quality employment across various sectors.
  • This will not only realize the aspirations of millions but also drive the nation towards a more equitable and robust economy.

Source:The Economic Times

Associated Article :

https://universalinstitutions.com/inclusive-growth-2/

Mains Practice Question :

GS-3

“Despite significant GDP growth, India faces a paradox of jobless growth, particularly affecting the educated youth and women. Discuss the structural issues behind this phenomenon and suggest measures to enhance employment generation across various sectors.”250 words)