Business Cycles (ii)

Macroeconomics & Business Environment

18 Nature and Trends of Unemployment in India

PREPARED BY: Pyare Lal Verma, Faculty Eco/QM

Session

18

1

To understand about the nature and Trends of Unemployment in India.

3

To provide an estimate of unemployment in India.

•

To understand about the nature of urban unemployment in India.

•

Issues associated with implementation of employment programs in India

Session

18

18.1 Nature of Unemployment in India a) Nature of unemployment in India is i. Structural ii. Disguised b) Cause of unemployment: inadequacy of productive capacity to create adequate jobs c) Cyclical unemployment (Keynesian involuntary unemployment) is also on increase since last two decades

Session

18

18.1

Classification of unemployment in India

a) Urban Unemployment i. Industrial unemployment ii. Educated unemployment b) Rural Unemployment i. Open unemployment ii. Disguised unemployment iii. Seasonal unemployment

Session

18

18.2

Estimates of unemployment in India

a) Planning Commission since 1951 provides estimates on unemployment. c) Raj Krishna calculate first ever most reliable estimate of unemployment rates from data provided by NSS. e) NSSO developed and standardized the concepts and definitions of labor force, employment and unemployment suitable to Indian condition. g) Since 1972-73 these concepts are adopted by NSSO and Planning Commission.

Session

18

18.2

Unemployment Measurement in India

The three concepts of unemployment developed by NSSO are: b)Usual Status : determine usual activity status & indicate chronic unemployment as usually unemployment in the reference year are counted as unemployed. d)Weekly Status : Determine activity status of a person in preceding seven days. Any person worked for an hour or more during that period is employed. f)Daily Status : it considers the activity status of a person for each day of the preceding seven days of reference period. It is ratio of labor days per week reported as unemployed to the total labor force days per week.

Session

18

18.2

Unemployment Measurement in India

a) Daily status concept provides the most appropriate measure of unemployment as it cover open as well as partial unemployment c) Weekly status is rough measure of proportion of people remained unemployed for a whole week. e) Usual status is the rough estimate of the chronic unemployment rate.

Session

18

18.2

Estimates of Unemployment during eighties

Status Usual Principal Status

1972-73

1977-78

1983

1987-88

-

4.23

2.77

3.77

Usual Principal & Subsidiary Status

1.61

2.47

1.90

2.62

Weekly Status

4.32

4.48

4.51

4.80

Daily Status

8.35

8.18

8.28

6.09

a) A shift from the state of unemployment towards greater open unemployment b) There are large differences in the unemployment rates among different states. c) In April 1992 the number of people seeking full time new employment opportunity stands at 23 million.

Session

18

18.3

Employment Guarantee Programs

a) Most of unemployment in urban areas are Open & Undisguised b) Government of India take up various employment guarantee programs like: Program

Objective

Rural Works Program (1970-71)

Construct permanent civil works

Crash Scheme for rural employment (1972)

Projects of durable nature

DPAP (1973) Command Area Development Program (1974-75) Hill Area Development Program (1974) Desert Development Program (1977-78)

Area Development Program

Session

18

18.3

Employment Guarantee Program Program

Objective

Food for Work Program (FFWP) 1977

Create durable community assets and social infrastructure

Training for Rural Youth in Self Employment (TRYSEM) 1979

Provide technical skill to 18 to 35 years youths

National Rural Employment Program (NREP) 1980

Restructured and renamed FWP to tackle seasonal unemployment

Integrated Rural Development Program (1976-80)

Provide self employment and raise level of income

Development of Women and Children in Rural Areas (DWCRA) 1982-83

Supportive program for IRDP

Rural Landless Employment Guarantee Program (RLEGP) 1983

Program to supplement NREP, 100 day employment to one member of landless family

Self Employment Scheme for Educated Unemployed youth (SEEUY) 1983-84

18-35 year old

Session

18

18.3

Employment Guarantee Program Program

Objective

Self Employment Program for Urban Poor (SEPUP) 1986-87

Families coming under BPL

Jawahar Rojgar Yojana (JRY) 1989

Merging NREP and RLEGP

Nehru Rojgar Yojana (RRY, 1989) with three components a) The scheme for Urban Micro Enterprise; b) The scheme for Urban Wage Employment; c) The scheme for Housing and Shelter Upgradation

JRY for rural areas and NRY for urban areas

National Rural Employment Guarantee Act (NREGA)

To reduce migration of rural poor households in the lean period by providing 100 days of guaranteed unskilled manual labor at minimum wage. Works include a) water conservation; b) land development; c) drought proofing

Session

18

18.3

Implementation of Employment Program

a) Lack of resource to finance these programs c) Choice of appropriate work to be done e) Lack of clarity regarding organization of these programs g) According to Ragner Nurkse, LDCs cannot raise adequate resources for capital projects from taxes and domestic saving, they therefore shall import foreign capital

Session

18

THANK YOU