CH – 11

PROBLEMS OF INDIAN
ECONOMY-1
(UNEMPLOYMENT)
Introduction.
The problem of unemployment is a serious problem
among various economic problems prevailing in India.
Even after six and a half decades of planning, this
problem has not been effectively solved. Of cousre, it is
true that employment opportunities in various sectors
of economy during the five year plans have increased,
but in relation to demand for employment, this increase
is found to be grossly insufficient. As a result, the
incidence of unemployment has been continuously
increasing during each of the plans .
Nature of Unemployment.
In a developing country India, unemployment is
not a short term problem, but it is a long term and
entrenched problem. Nature of unemployment in India
is ‘chronic unemployment’ and arisen due to
population pressure on the limited resources available
because of slow development. Unemployment is not
limited to a particular caste or class. Neither it has
been found in a particular area or region. It has come
to exist in all classes and all the sectors of the
economy. The main solution of the problem is to
increase employment opportunities by increasing
capital and other factors of production.
Contd…..
Analysis of the problem of unemployment in
India:
In Rural In Urban
Areas Areas

(a) Seasonal (a) In Industrial

Unemployment Labour Class

(b) Disguised (b) In Educated

Unemployment Class
 Unemployment in Rural Areas
➢ Seasonal Unemployment:
➢ According to 2011 census , 50.74% of the total
population of the country live in villages and the main
occupation of the rural population is farming. But it
hardly gives employment to the rural people for the
entire year , as a result they have to remain
unemployed for a few months of the year and this is
called `Seasonal Unemployment`. Method of
cultivation, type of land, type of Crop, possibility of
two crops etcetera influence the extent of seasonal
unemployment. usually it is estimated that most of
the persons engaged in farming remain unemployed
for 3 to 4 months.
➢Disguised Unemployment:
➢ Disguised Unemployment is also known as Hidden
Unemployment and in underdeveloped countries like India , it is
found to exist mostly in the agricultural sector. A characteristics of
this type of unemployment is that from outside it seems that
people are engaged in work and are getting wages, but in reality
they are unemployed, they are not clearly found to be
unemployed the situation is called is disguised unemployment.
The main reasons for disguised unemployment in the agricultural
sector of India is that on one side there is population pressure on
farming and on the other side there is insufficient growth in the
employment opportunities in the non agricultural sector .
 Unemployment in Urban Areas.
➢ In Industrial Labour Class :
The main reason for Industrial unemployment in
India is the slow industrial development and use of
inappropriate technology. In India , compared to the
industrial growth rate, a huge increase in the economically
active population , the growth of labour force has
remained high , as a result a large extent of unemployment
is found in this sector.
➢ In Educated Class :
Unemployment of the educated persons , is one of
the important facets of the problem of unemployment in
India. There does not seem to be increasing in the
employment opportunities consistent with the increasing in
the opportunities for education.
 Causes of Unemployment.
The main causes of unemployment are as follows :
i. Caste System.
ii. Slow Economic Growth.
iii. Increase in Population.
iv. Agriculture is a Seasonal Occupation.
v. Joint Family System.
vi. Fall of Cottage and Small Industries.
vii. Slow Growth of Industrialisation.
viii. Less Savings and Investments.
ix. Causes of Under Employment.
x. Defective Planning.
xi. Expansion of Universities.
xii. Inadequate Irrigation Facilities.
xiii. Immobility of Labour.
(i) Caste System:
In India caste system is prevalent. The work is
prohibited for specific castes in some areas.
In many cases, the work is not given to the
deserving candidates but given to the person
belonging to a particular community. So this gives rise
to unemployment.
(ii) Slow Economic Growth:
Indian economy is underdeveloped and role of
economic growth is very slow. This slow growth fails
to provide enough unemployment opportunities to
the increasing population.
(iii) Increase in Population:
Constant increase in population has been a big
problem in India. It is one of the main causes of
unemployment. The rate of unemployment is 11.1%
in 10th Plan.

(iv) Agriculture is a Seasonal Occupation:

Agriculture is underdeveloped in India. It
provides seasonal employment. Large part of
population is dependent on agriculture. But
agriculture being seasonal provides work for a few
months. So this gives rise to unemployment.
(v) Joint Family System:
In big families having big business, many such
persons will be available who do not do any work and
depend on the joint income of the family.
Many of them seem to be working but they do not
add anything to production. So they encourage
disguised unemployment.

(vi) Fall of Cottage and Small industries:

The industrial development had adverse effect on
cottage and small industries. The production of cottage
industries began to fall and many artisans became
unemployed.
(vii) Slow Growth of Industrialisation:
The rate of industrial growth is slow. Though
emphasis is laid on industrialisation yet the avenues
of employment created by industrialisation are very
few.

(viii) Less Savings and Investment:

There is inadequate capital in India. Above all,
this capital has been judiciously invested. Investment
depends on savings. Savings are inadequate. Due to
shortage of savings and investment, opportunities of
employment have not been created.
(ix) Causes of Under Employment:
Inadequate availability of means of production is
the main cause of under employment. People do not
get employment for the whole year due to shortage
of electricity, coal and raw materials.

(x) Defective Planning:

Defective planning is the one of the cause of
unemployment. There is wide gap between supply
and demand for labour. No Plan had formulated any
long term scheme for removal of unemployment.
(xi) Expansion of Universities:
The number of universities has increased
manifold. There are 385 universities. As a result of
this educated unemployment or white collar
unemployment has increased.

(xii) Inadequate Irrigation Facilities:

Even after the completion of 9th five plans,
39% of total cultivable area could get irrigation
facilities.
Due to lack of irrigation, large area of land can
grow only one crop in a year. Farmers remain
unemployed for most time of the year.
(xiii) Immobility of labour:
Mobility of labour in India is low. Due to
attachment to the family, people do not go to far off
areas for jobs. Factors like language, religion, and
climate are also responsible for low mobility.
Immobility of labour adds to unemployment.
.
 Suggestions to Reduce Unemployment
i. Change in Industrial Technique.
ii. Policy regarding Seasonal Unemployment.
iii. Change in Education System.
iv. Expansion of Employment Exchanges.
v. More Assistance to Self-Employed People.
vi. Full and More Productive Employment.
vii. Increase in Production.
viii. More Importance to Employment Programmes .
ix. High Rate of Capital Formation.
x. Industries in Co-operative Sector.
xi. Decentralisation of Industrial Activity.
xii. Population Control.
(i) Change in Industrial Technique:
Production technique should suit the needs and
means of the country. It is essential that labour
intensive technology should be encouraged in place of
capital intensive technology.

(ii) Policy regarding Seasonal Unemployment:

Seasonal unemployment is found in agriculture
sector and agro based industries.
To remove it:
a) Agriculture should have multiple cropping,
b) Plantations, horticulture, dairying and animal
husbandry should be encouraged,
c) Cottage industries should be encouraged.
(iii) Change in Education System:
Educational pattern should be completely
changed. Students who have liking for higher studies
should be admitted in colleges and universities.
Emphasis should be given on vocational education.
Qualified engineers should start their own small
units.

(iv) Expansion of Employment Exchanges:

More employment exchanges should be opened.
Information regarding employment opportunities
should be given to people.
(v) More Assistance to Self-Employed People:
Most people in India are self employed. They are
engaged in agriculture, trade, cottage and small scale
industries etc. These persons should be helped
financially, providing raw materials and technical
training.

(vi) Full and More Productive Employment:

The main objective of county’s employment policy
should be to increase employment opportunities and
productivity of labour. Govt. should adopt a policy
that provides employment to all people.
(vii) Increase in Production:
To increase employment, it is essential to increase
production in agriculture and industrial sectors.
Development of small and cottage industries should
be encouraged.

(viii) More Importance to Employment

Programmes:
In five year plans more importance should be
given to employment. The programmes like irrigation,
roads, flood control, power, agriculture, rural
electrification can provide better employment to
people.
(ix) High rate of capital formation:
Rate of capital formation in the country should be
accelerated. Capital formation should be particularly
encouraged in such activities which generate greater
employment opportunities. Capital output ratio should
be kept low.

(x) Industries in co-operative sector:

Industries in co-operative sector should be encouraged.
Kerala Govt.’ set up a textile mill covering 600
unemployed persons on co-operative basis. This is a
novel approach to fight against unemployment.
Different State Govt. should take necessary steps in this
direction.
(xi) Decentralisation of industrial activity:
Decentralisation of Industrial activity is necessary
to reduce unemployment. If industrial activities are
centralised at one place, there will be less employment
opportunities in the under developed areas. So Govt.
should adopt such policies which encourage
decentralisation of industrial activity.

(xii) Population control:

The growth of population should be checked in
order to solve unemployment, problem. Family
planning programme should be implemented widely
and effectively.
 Special Programs for Employment
➢ In recent years , the government has taken up many
special programs for increasing employment , out of
which the main programs are as follows :
A. Sampoorna Gramin Rojgar Yojana.
B. Swarna Jayanti Gram Swarojgar Yojana.
C. Swarna Jayanti Shaheri Rojgar Yojana.
D. Jayaprakash Rojgar Gaurantee Yojana.
E. Pradhan Mantri Gramoday Yojana.
F. Gramya Rojgari Sarjan Karyakram.
G. Pradhan Mantri Rojgar Yojana.
H. Pradhan Mantri Gram Sadak Yojana.
I. Mahatma Gandhi Rashtriya Gramin Rojgar
Guarantee Yojana.