| Topic: GS3 – Indian Economy – Issues relating to development and employment. |
| Context: |
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- Unemployment refers to the condition where individuals capable of working are actively seeking employment but are unable to secure suitable jobs.
- An unemployed person is someone who is part of the labour force, and possesses the requisite skills but currently lacks gainful employment.
- Basically, an unemployed person is someone of working age, jobless, able and available to work, and actively looking for a job.
- CMIE Consumer Pyramids Survey: The discussion around unemployment largely stems from the CMIE Consumer Pyramids Household survey, which has faced scrutiny due to methodological concerns, prompting Ashoka University to pause research utilizing this data. Claims suggesting a massive withdrawal of workers need to be critically examined in light of these challenges.
- Contrast with Pakistan: Assertions that Pakistan’s labor market is more attractive to youth than India’s overlook the dynamic nature of both countries’ economies and the ongoing transformation in India’s labor market.
- Focus on Wages: The discourse shifts from unemployment to the broader issue of wages, highlighting the prevalence of informal employment and subsistence agriculture. The low unemployment rate masks the reality of underemployment and inadequate wages, indicating a need for a nuanced diagnosis of the problem.
- Misguided Solutions: Election promises of expanding public sector employment and wealth confiscation represent a misdiagnosis of the issue and may lead to unsustainable solutions. Prioritizing redistributive justice over contributive justice risks undermining the aspirations of young Indians and perpetuating systemic issues.
- Balanced Policy Approach: The “Madhyam Marg” (middle path) between hostility towards the private sector and minimal state intervention advocates for efficiency, effectiveness, and technology-driven reforms in the welfare state. This approach emphasizes raising private employer productivity through formalization and leveraging digital infrastructure for inclusive growth.
- Progress and Challenges: Despite significant progress in areas like education and investor confidence, structural challenges persist in India’s labour market. The ASER report and Gross Enrolment Ratios indicate positive trends in education, while investment inflows reflect growing confidence in India’s economic prospects.
- Market Dynamics: Economist Alfred Marshall’s framework of market periods provides insights into India’s labour market dynamics, emphasizing the role of demand in shaping labour prices over time. However, modelling long-term and secular trends presents challenges amid evolving technological and demographic shifts.
- Addressing Skepticism: External skepticism regarding India’s progress underscores the need for a balanced assessment that acknowledges achievements while addressing ongoing challenges. It also highlights the importance of data-driven analysis and a nuanced understanding of labor market dynamics.
- Navigating the discourse on unemployment in India requires a multifaceted approach that goes beyond headline figures to examine underlying wage dynamics, policy implications, and long-term trends.
- By adopting a balanced policy framework and leveraging insights from economic theory, India can address the complexities of its labor market and pave the way for inclusive growth and development.
| What are the Major Causes of Unemployment in India? |
Population Size:
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| PYQ: Disguised unemployment generally means (2013) (a) large number of people remain unemployed (b) alternative employment is not available (c) marginal productivity of labour is zero (d) productivity of workers is low Ans: (c) |
| Practice Question: How does recent rhetoric regarding unemployment in India compare to claims about Pakistan’s labor market attractiveness, and what implications does this rhetoric hold for India’s labor market policies and economic development? (250 words/15 m) |
