Monday, June 24, 2024

Tackling India’s Jobs Challenge: A Path to Inclusive Growth

Written By A Srinivasan (Grade 11)

India, a land of many cultures and traditions, is confronted with an acute problem that affects millions: the jobs crisis. According to the Centre for Monitoring Indian Economy (CMIE), according to available figures, India kept an unemployment rate of around 7% throughout last year. In December 2022, it hit a dangerous high of almost 8%, they note. This is not only above the global average; it also presents a long-term stumbling block for the country.

Understanding the Types of Employment in India

In India, there are two major types of employment: wage employment and self-employment. Wage employment refers to permanent work with a fixed wage in institutions of the government, private firms, and transnational corporations. On the negative side, many Indians are doing daily-wage work. Construction and agriculture offer little stability in this regard; neither does unorganised labour.

The second type is self-employment, in which people employ themselves. This includes entrepreneurs who engage in small businesses; farmers, many of whom operate independently on their farms; as well as freelancers and people engaging in informal work arrangements.

Reasons Behind Unemployment

The roots of India’s unemployment problem go deep. Stagnant employment growth, hidden unemployment in the informal sector, and changes brought by technology are among the factors contributing to this. A lack of responsiveness in employment growth to changes in output growth is what we call the phenomenon, or “jobless” aspect of economic expansion.

Jobless Growth Explained

As an economy expands, it tends to become more productive. But in the case of India, the strong linkage between output growth and labour-saving technologies means a situation that economists call jobless growth. There are two types of regimes characterised by different levels of responsiveness to variations in economic activity: Low sensitivity is called regime I; high sensitivity is called regime II.

Macroeconomic Policy Frameworks

In India, mainstream policy over the years has been geared towards increasing output growth, assuming that this would trickle down into employment. Keynesian theory, the Mahalanobis strategy, and structuralist theories have all been used to guide policy discussions, but this evolving job situation requires a new approach.

Addressing Unemployment in India

Shifting focus is necessary to tackle unemployment. That means an NEP with both demand-side and supply-side components is urgently needed. This covers improving education and health services to fill skills gaps, as well as directly creating public jobs.

An urban MGNREGA (a rural employment guarantee scheme) could serve as a safety net for the poor and create public assets and services without increasing deficits. Moreover, industrialization, investment in agriculture, and the development of different forms of cultivation as well as agro-processing industries can play an important role in job creation.

These are vital steps to improving human capital and employability, including expanding education and healthcare, reforming the educational system, and providing vocational training. To ease pressure on urban areas while also bringing about more balanced growth and a fairer distribution of benefits, rural development needs to be strengthened with decentralisation.


All in all, India’s struggle to eliminate unemployment must be multifaceted. India can chart the way to inclusive and sustainable development by integrating stimulative economic policies with targeted policies for enhancing employability and creating jobs of diversity.

Featured Image Courtesy – Business Today

A Srinivasan
A Srinivasan
I'm a passionate writer and I like writing on a regular basis in different fields and expanding my knowledge. I have been to a few workshops for writing which has tremendously moulded my writing ability and my way to present a topic.


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