UPSC Economics Employment and Infrastructure Umemployment


Category : UPSC





Contents of the Chapter

  • Demand-Deficient or Cyclical Unemployment
  • Seasonal unemployment
  • Frictional or Search Unemployment Structural Unemployment
  • National Sample Survey Organization (NSSO)
  • National Sample Survey Organization Concept of work
  • Labour Sector Reforms
  • Trade Union Law Changes
  • 12th Plan Strategy
  • Growing Inequalities
  • Broader Picture
  • 12th Plan Some Employment-Related Ideas
  • The Areas to Concentrate are



An important objective of development planning in India has been to provide for gainful employment opportunities. The level, quality and growth of wages. Incomes and employment in the economy as measured by GDP, as also growth in population and consequent additions to the labour force. Thus, growth is the primary driver of employment. The employment created is none if growth is planned in labour intensive way. A number of specifically designed poverty alleviation programmes are in operation in rural and urban areas in order to ecourage self and wage employment.


Q.1.     Give an account of Types of Unemployment.


  • Demand-deficient of Cyclical unemployment


  • Seasonal unemployment


  • Frictional or Search unemployment


  • Structural unemployment


Demand-Deficient or Cyclical Unemployment

Demand-deficient unemployment occurs when there is not enough demand to employ all those who want to work. It is also often known as cyclical unemployment because it will vary with the trade cycle. When the economy is booming, there will be much demand and so firms will be employing large numbers of workers. Demand deficient unemployment will at this stage of the cycle be fairly low. If the economy slows down, then demand will begin to fall. When this happens firms will begin to lay workers off as they do not need to produce so much. Demand-deficient unemployment rises. The behavior of demand-deficient unemployment will exactly mirror the trade cycle. The joblosses reported in the after math of the global recession since 2008 in India and elsewhere is an example.


Seasonal unemployment

Seasonal unemployment is fairly self-explanatory. In India agricultural employment is linked to monsoon and its behavior. If there is a monsoon failure, unemployment are often highly regionalized.


Frictional or Search Unemployment

When a person loses his job or chooses to leave it, he/she will have to look for another one. On average it will take everybody a reasonable period of time as they search for the right job. This creates unemployment while they search. The more efficiently the job market is matching people to jobs, the lower this form of unemployment will be. However, if there is imperfect information frictional unemployment will be higher.


The better the economy is doing, the lower this types of unemployment it likely to be. This is because people will usually be able to find jobs that suit them more quickly when the economy is doing well.



Structural Unemployment

Structural unemployment occurs when the structure of industry changes. As an economy develops over time the type of industries may well change. This may be because people’s tastes have changed or it may be because technology has moved on and the product or service is no longer in demand. In the developed countries like the UK many industries that were once major employers have now all but disappeared. Shipbuilding and mining are prime examples, but there are also many more minor examples as well.


Structural unemployment occurs when a labour market is unable to provide jobs for everyone who wants one because there is a mismatch between the skills of the unemployed workers and the skills needed for the available jobs.


Much technological unemployment (e.g. due. to the replacement of workers by machines) might be counted as structural unemployment alternatively, technological unemployment might refer to the way in which steady increases in labour productivity mean that fewer workers are needed to produce the same level of output every year.


Technological unemployment has historically been temporary and the economy has adapted and created jobs in other sectors, however, some analysts argue that many jobs in the economy will ultimately be automated via advancing technologies such as robotics and artificial intelligence resulting in substantial, permanent structural unemployment. The massive drive for skilling being witnessed in India is to address structural unemployment.


National Sample Survey Organization (NSSO)

The NSSO collects data through sample surveys based on scientific technique of random sampling through household enquiry both in rural and urban areas.


National Sample Survey Organization Concept of work

The NSSO has defined ‘work or’ gainful activity’ as the activity pursued for-pay, profit or family gain or in other words, the activity which adds value to the national product. Normally, it is an activity, which results ‘in production of goods and services for exchange. However, all activities in ‘agricultural sector’ in which a part or whole of the agricultural production is used for own consumption and does not go for sale are also considered as gainful.


The survey has adopted three different approaches to measure employment and unemployment. The three approaches are:


Usual status: approach with a reference period of 365 days preceding the date of survey. It shows the – chronic unemployment in the country. Also called long-period unemployment or open unemployment


Current weekly status: approach with a reference period of seven days preceding the date of survey, Current daily status: approach with each day of the seven days preceding date of survey as the reference period.


Projections of labour force and employment are made on the usual status concept.


The following concepts are important.


The labour force consists of the number of people aged 15 and upto 59 years who are employed (that is, those who   currently have jobs) and unemployed (that is, those who do not have jobs but who are actively looking for work) and those who are in this age group but are not looking for work.


Full employment of natural rate of unemployment (both being the same.)


Jobs are all that want them. This does not mean zero unemployment because at any point in time some people do not want to work. Also, because some people are always between jobs, there will usually be some frictional unemployment; Full employment means that everyone who wants work and is willing to work at the market wage is in work. Most governments aim to achieve full employment.


Underemployment: The term underemployment has multi interrelated meanings. In current usage, it describes the employment of workers with high skill levels in low-wage jobs that do not require such abilities. When used by economists the term refers to the practice of businesses or economies employing workers who are not fully occupied. Underemployment means that the full potential of workers is not being utilized.


Disguised unemployment: The disguised unemployment refers to the case when a person is employed in a sector where his/her employment does not make any difference in the output. Such cases are quite common in the agricultural sector.


“Casual” employment refers to workers who are hired by the day, or week, or for a particular project. These workers are not employed all year. Recourse to casual labour being employed more in number is known as casualization of labour.


Labour force participation rate: The labour force participation rates is the percentage of the population aged between fifteen years and 59 years who are looking for work- it means so much the labour force wants to work. Rest of The labour force may not want to work as they want to study or stay at home or acquiring skills etc.


Workforce is that part of the labour force is employed.


Employment elasticity: One indicator widely used for analyzing the operation of the labour market is employment elasticity. It measures the percentage changes in employment induced by change in (GDP. Hence, the elasticity of employment seeks to capture the responsiveness of the labour market to changes in macroeconomic conditions are represented by GDP growth.


Employment intensity indicates the extent to which growth creates employment.


Employment Rate is the ratio of employed persons to labour force population – 15 years and upto 59 years.


Unemployment rate is the extent of unemployment in the labour force at some particular time, expressed as a percentage of the total available labor force.


Q.2.     What is Okun’s law?

Ans.     A description of what happens to unemployment when the rate of growth of GDP changes, based on empirical research by Arthur Okun (1928-80). It predicts that if GDP grows at around 3% a year, the jobless rate will be unchanged. If it grows faster, the unemployment rate will fall.


Labour Sector Reforms

Labour sector reforms are a part of the second generation reforms aimed at making Indian industry competitive in the age of globalization. The Indian labour scenario today is marked by rigid labour laws. 120 labour related laws made by Union and State Government to protect labour which makes up 8% of the total labour force – organised labour. With so much rigidity level playing field is being denied to Indian industry and so its ability to compete with the foreign players is negative.


With overprotected labour, employers are preferring either not to invest or are resorting to capital intensity both leading to reduced job creation.


Rigid labour laws also contribute to industrial sickness partly because labour because labour can not be removed according to the priorities of investment and market. There are more than 3 lakh sick and weak units today with about Rs. 20,000 crores of rupees locked in them with implications for bank profitability as well.


As a part of second generation reforms it is recognised that right sizing to restructure is the only way to globally compete for which the existing labour laws need to be rationalized, Labour law flexibility is also important for efficiency gains as over-employment vitiates work culture and erodes productivity.


It needs to be remembered that archaic labour laws have contributed to low rate of growth of employment which is less than the addition to the labour force.


Q.3.     Give an account of Globalization and its impact on Labour?

Ans.     Globalization boosts economic growth as it expands market. It creates more jobs but the laws should be favorable. It can also deliver rude shocks as in the Great Recession of 2008 and since.


Labour reforms are necessary for the industries for the following reasons


  1. competition from imports in the post-QR regime where the foreign countries have-flexible labour laws


  1. reduced import duties create greater competition for the domestic industry


  1. to cut costs and be productive


  1. to make the economy export-intensive.


With the opening up of the economy and the liberalization of trade under the WTO regime, the country can no longer afford to carry on with the existing labour market rigidities. Now there is a new urgency to improve the quality of Indian products and the competitive strength of the Indian industry. Special efforts are needed to upgrade skills and improve labour productivity at a much faster pace to survive and grow in the fast changing world business environment. For this, labour policy will have to move away from restrictions and regulation to the facilitation and promotion of growth with, increased labour participation in management.


In response to globalization, the following developments on the labour market front are visible in Indian economy today


  1. other input costs being not amenable to cutting, labour has borne the brunt of rest, ucturing process in the search of the employers to cut costs and improve profitability


  1. wage cuts are being offered to workers to retain jobs


  1. permanent jobs are becoming scarce as companies are relying on contract labour for reasons of flexibility and wage gains


  1. VRSs


  1. some PSUs signed collective agreements for a 20% job cut.


Trade Union Law Changes

In response to the demands and challenges of the process globalization, the Government found it necessary to rationalise the TU laws for better labour relations and productivity. The changes relate to


  1. 10% of the total strength of the employees or at least 100 members must form a trade union earlier when 7 members sufficed


  1. Curbs on the participation of outsiders in the leadership of the TUs


  1. restriction in the number TUs


  1. promotion of accountability in their functioning- main proper financial accounts and conduct elections.


For instance, the Trade Union. Act 1926 allows seven persons to form a union and half the office bearers can be outsiders. This had led to a multiplicity of unions with outsiders playing a prominent role. In most cases, the outsiders controlling the unions are not really concerned about the genuine interests of the organisation and workers. They often misguide workers and use them to pursue their own agenda.


Most trade, unions in the public and private sector whether in manufacturing units, banks, railways, road transport, ports, state electricity boards, or aviation, have been captured by political forces. Because of the strategic links, these organisations have the economy; the trade unions controlling hardly eight per cent of the country’s labour force are able to delay economic progress. As a result labour sector reforms have been postponed and the problem of industrial sickness has assumed alarming proportions and vast productive resources are locked up in thousands of sick industrial units in the public and private sector.


Security of employment is best ensured when workers get competing opportunities for employment Trade unions need to become partners in the reform process and help in creating more employment opportunities.


The Government, on its part, should make all possible efforts to dispel the fears of trade unions by enlarging the scope and coverage of the social security net. It must develop labour market institutions of assist workers in upgrading skills and make available alternative job opportunities.


For this purpose, the Government should also consider setting up a skill development fund on the lines of-the mechanism prevailing in Malaysia, Singapore and South Korea.

The laws requiring labour legislation relaxation in India are


  • Industrial Disputes Act (1947) that requires companies employing more than 100 workers to seek government approval before they can remove employees or close down. In practice, permissions for firing employees are rarely granted.


  • Contract labour laws which require that firms can not employ contract labour for core activities should be amended so that flexibility is given to firms


Critics however say that the organized labour in India is only about 6-7% of the total workforce and so’ labour laws reforms as mentioned above are largely irrelevant. Even when they are made, severance package should be humane.


12th Plan Strategy

Financing the Public Sector Plan in the Twelfth Five Year Plan (2012-17)


The Approach Paper to the Twelfth Plan has indicated the provision assessment of resource availability for the centre for the Twelfth Plan as detailed by the working Group on Centre Financial Resources, These estimates might is finalized for inclusion in the Twelfth Plan Document.


Cross Budgetary Support: The Gross Budgetary Support (GBS) for the Twelfth Plan is projected to increase by about 0.83 percentage point of DP over five year period from 4.92 per cent of GDP in 2011-12 to 5.75 per cent of GDP by 2016-17 (based on then available nominal GDP data), Compositionally, the increase in CBS in the Twelfth Plan is due to the following:


  • Net tax revenue for the Centre is expected to increase only by 151 percentage points from 740 per cent of GDP in 2016-17 (BE) to 8.91 per cent of GDP in 2016-17 non-tax revenues are expected to fail from percent of GDP in 2011-12 to 0.88 percent of GDP in 2016-17.


  • Contribution 01 non debt capital receipts (mainly dis-investment proceeds.) as a ratio of GDP is also expected to fall.


  • There is no room for fiscal expansion and the fiscal deficit is expected to be lowered from 4.7 per cent of GOP in 2010-11 to 30 per cent of GDP in the latter part of the Twelfth Plan in line with the Governments medium terms fiscal consolidation policies.


The limited scope to increase GBS would be a binding constraint in increasing allocations to important sectors like health education and infrastructure. Thereby strict prioritization will have to be enforced in the Twelfth Plan to achieve the sectoral growth targets.


Aggregate resources for the Centre: Aggregate resources for the Centre are to fell from the 14 per cent of GOP in 201142 (BE) to 13.11 is projected to increase mainly due to project decline in non-Plan expenditure from 9.99 per cent of GDP in 2011-12 to 7.36 per cent of GOP in 216-17. The projected decline in Non-Plan Expenditure is crucial for financing the public sector plan.


Non-Plan expenditure: It is projected to grow at an average terms. Among the non-plan expenditure items, subsidies have remained rather high as a proportion of GDP in the past and the effective targeting of subsidies would be critical for achieving the resource targets in the Plan.


  • Interest payments’ forecast on the basis of projected growth of debt with interest rate of 6.7 per cent on annual incremental borrowings in consonance with FRBM targets.


  • Defence expenditure to fail from 1.83 percent of GDP in the base year to 1.56 per cent of GDP in the final year and the pay and allowances to grow at an annual rate of 7.0 per cent in nominal terms and unlikely to exceed (no likelihood of increase owing to growth in public employment or pay Commission revision).


  • Pension expenditure to grow at an annual rate of 9.0 per cent- the level assumed by the 13 Finance Commission.


  • Subsidies projected to decline from an estimated 1.6 per cent of GDP in 2011-12 (BE) to 1.24 percent of GDP in the final year.


  • It would be crucial to raise additional tax resources to raise the level of resources for the Twelfth Plan period, which could become possible if the critical tax-reforms take off and make the economy more competitive.


Q.5.     Briefly discuss the latest outcome of NSSO’s 66th Round Survey?

Ans.   The National Sample Survey Organization’s (NSSO) latest survey data (66th round) for 2010 on employment and unemployment shows a significant slowdown in job creation between 2004-05 and 2009-10 a period of a jobless growth. Although the country’s real GDP growth averaged a robust 8.6 per cent per annum, the total employment growth was only 0.8 per cent per annum over this period compared to an annual 2.7 per cent in the previous five year period. The Labour Force Participation rate, which is a part of labour force that is ready for employment-seeking work (excludes students etc) witnessed a decline to 39.2 per cent in 2009-10 from 42 per cent in 2004-05 It is seen that the labour participation rate for women dropped much more over this period from 29.4 per cent to 23.3 per cent. This appears to be one of the reasons for the lower employment growth between 2004-05 and 2009-10 than between 1999-2000 and 2004-05.


The sample size of this 66th round was 1,00,957 households – 59,129 from rural areas and 41,828 from urban areas.


It must be noted that the year of the survey 200-10 was an abnormal one with the global financial and economic crisis affecting employment in urban areas. At the same time, inadequate monsoons had caused droughts in many parts of the country that could have led to lower employment in rural areas. Hence the National Statistical Commission has already asked the NSSO to conduct a fresh round of survey during the current fiscal.


Closer examination of the findings reveal certain positive developments in the economy


(a) Opting for Education

The first encouraging development is that more youngsters are now opting for education. The increase in the number of boys and girls opting for education has been quite substantial in the recent period. This is true of the age cohorts of both 15 to 19 years as also 20 to 24 years. The percentage of males in age group 15 to 19 who reported attending educational institutions as their primary activity was 48 per cent in 1999-2000. It increased to 51 per cent in 2004-05 and shot up to 64 per cent in 2009-10. For males in the age group 20-24, the upturn was even shaper: from 14 percent in 1999-2000 and 15 per cent in 2004-05 to 23 per cent in 2009-10. According to the 66th round, the achievement on this front was even better among women.


Looking at these figures, it should not come as a big surprise that the employment growth witnessed a slowdown both for men and women over the latest period 2004-05 to 2009-10. Evidently, opting for more education appears to be an important reason for the decline in the labour force participation by about three per cent over this period.


Going by the data, now there are about 30 million more young people opting for more education as their hopes and aspirations are on the rise. They are spending more number of years in secondary and tertiary education in the hope of being able to access better job opportunities. The total number of such youth is now estimated at about 55 million. This is a signal as well as the challenge for the policymakers about the huge demand for better-paying jobs that will arise soon, perhaps with the next five years or so. Naturally, the pace of job creation will have to go up significantly to accommodate the new entrants in the labour force the better qualifications.


It may be noted that in the previous five year period, all forms of employment (regular, casual, paid work and self-employment) increased by only 28 million against the 11th Plan target of 50 formidable to ensure that the country is able to reap the demographic dividend.


(b) Rising Incomes & Consumption

The other positive development relates of the significant rise in the real wages for both men and women. For salaried women workers in rural areas, the salaries and grown at 1.7 per cent per year between 1999-2000 and 2004-05. However, they rose at a whopping 12.8 per cent per annum between 2004-05 and 2009-10 For urban women, they rose from 1.8 per cent per annum to 15.1 per cent over the same period. For men in rural areas, salaries grew by 2.6 per cent annually in the first period ad 11.5 per cent in the second period. For women casual workers in rural areas, the annual increase in wage rates went up from 3.5 per cent in the first period to 14.6 per cent in the second period. For urban women who were casual workers, the income growth was 2.8 per cent year in the first period and 11.8 per cent in the second period. Similar was the trend for male workers.


The NSSO survey shows that rural wages have been rising and poverty has been coming down. It was seen that the number of poor people in the country declined to 32 per cent in 2009-10 from 37 per cent in 2004-05, using Suresh Tendulkar methodology. However, serious efforts are needed to rein in the relentless rise in inflation over the past two years to ensure that the purchasing power of wage earners is not eroded and more people are pushed below the poverty line once again.

Along with increasing incomes in real terms, the survey shows an increase in consumption power across the country, both in rural and urban areas. People are now earning more and spending more. Evidently, the stimulus measures taken by the government to prevent the consumption cycle from collapsing have played an important role in pushing up consumption. The monthly per capita consumption in rural areas has increased from Rs. 558.78 in 2004-05 to Rs. 927.70 in 2009-10. In urban areas, this has witnessed a much bigger rise from Rs. 1,052.36 to Rs. 1,785.81 over this period. The series of measures from 2004 onwards such as waiving of unpaid farm loans, the hefty pay hikes for government employees following the recommendations of the Sixth Pay Commission, and putting in place the flagship rural employment guarantee scheme NREGS appear to have played an important role in pushing up incomes and consumption.


According to the Labour Bureau in Shimla, farm wages have risen between 24.1 per cent and 106 per cent across states from January 2008 to December 2010. Bargaining power of rural Indians has increased from 2009, coinciding with the universal coverage of NREGS that has created a floor for wage rates.


Over half the Country’s workforce is self-employed and women receive less pay than men for Similar jobs 51% of the country’s total workforce are self-employed only 15.5% are regular wagers or salaried employees and 33.5% casual labourers.


The number of people Self-employed is higher in rural areas at about 54.2% against 41.4% in urban areas.


The highlights of the 66th round of the NSSO survey have been released for use in planning, policy formulation, decision support and as inputs for her statistical exercises by the government.


The indicators are based on a central sample of 1,00,957 households of Which 59,129 were from rural areas and 41,828 from urban. The Sam pies were collected between July 2009 and June 2010 and were drawn from 7,402 villages and 5,252 urban blocks across the country the ministry said.


Data shows that unemployment declined. The survey reveals that unemployment rate under the broadest definition of employment usual status, declined to 20 per 1000 from 23 per 1000. It also shows that female employees, both rural and urban, received less remuneration than their male counter parts for doing similar jobs. The average daily wage in urban areas stood at Rs. 365, against 232 in rural areas.


While the average earnings every day for male workers was Rs 249, it was only Rs 156 for women, indicating a female-male wage ratio of 0.63. The ratio was 0.82 in urban areas, with male’s earnings Rs 377 and Women Rs 399. While 41.4% of the urban workforce earned regular wages it was only 7.3% in rural areas.


Growing Inequalities

In spite of rising incomes, it is a matter of continuing concern that inequalities have also been widening which is a major, challenge relating to inclusive growth. The income disparities between the poorest and the richest in both rural and urban areas and between urban and rural population are on the rise. The current survey reveals that the spending of top 10 per cent of rural Indians was 5.76 times more than that of the bottom 10 per cent. This gap was slightly lower at 5.63 times during the previous survey period (2004-05).


In urban India, this inequality has widened much faster. In 2009-10, the top 10 per cent city-dwellers spent 10.11 times more than what the bottom 10 per cent could. In 2004-05, this ratio was 9.14. Despite all the social sector programmes government and the rural consumption boom, the income inequality between the rural and urban consumer has widened significantly over the past five years. The per capita expenditure level of the urban consumer is now 91 per cent higher than in rural counterpart. This difference was 80 per cent at the time of the National Advisory Council, this was because both agriculture and rural safety nets are working far less than their optimal capacity.


Serious efforts would be needed in the coming years to reduce the growing rural-urban divide through efficient and effective rural development programmes.


Broader Picture

Notwithstanding some of the positive developments narrated above, the broader picture relating to the employment scenario in the country continues to remain dismal. The survey figures show that an overwhelming 51 per cent of Indian workers were self-employed with the ratio as high as 54.2 per cent rural areas and a little over 41.1 per cent in urban areas. It is a well-known fact that the majority of the scaled “self-employed” are in that category not by choice but for want of any job opportunities. In fact, a large chunk of the poor in the country belong to this category engaging themselves in some petty part-time occupations because industry and services have not been able to absorb them. An overwhelming proportion of the self-employed workers in the country are small and petty traders and small and marginal farmers and many a times, their earning levels are as low as those of the casual labourers. A substantial number of rural self-employed persons also resort to casual labour work in order to supplement their incomes.


According to the survey, among those employed, the share of casual workers was as high as 33.5 per cent — 38.6 per cent in rural areas and 17.3 per cent in urban areas. The overall share of wage/salaried employment was 15.6 per cent — 41.4 per cent in urban areas and just 7.3 per cent in rural areas.


The survey also found that female employees, both in rural and urban areas, received less remuneration their male counterparts for doing similar jobs. The NSSO data shows that between 2004-05 and 2009-10, number of casual workers grew by 21.9 million.


Growing casualization of labour force in the country is no doubt a matter of concern. Casual workers now constitute 3.0 per cent of the workforce in the country.


92 per cent of India’s total workforce is in the unorganized sector and this situation has not changed over the last two decades. Focus of the policymakers should move from casual workers to shrinking the unorganized workforce that is denied the benefit of minimum wage, health care and other benefits.

Thus the overall employment Scenario in the count’ is mixed two decades after the much acclaimed launching of the liberalization process.


To Do

Over the decades, the share of agriculture in the country’s GDP has come down drastically and stood at only 14.6 per cent in 2009-10. But even now about 50 per cent of the total workforce in the country is engaged in this sector and it supports 60 per cent of the population in fact, there is large-scale disguised unemployment in agricultural for want of alternative job opportunities


Not surprisingly the per – worker Value addition as well as the incomes are the lowest in agriculture in our country; the per workers value-addition in the sector is estimated at around Rs, 20,990 per annum. In fact, the excessive labour force engaged in the sector is one of the main reasons for the declining Productivity being seen in and the prevalence of large-scale poverty. Unfortunately India’s economic reform largely bypassed agriculture. Till 2002-03 public investment in agriculture was actually fallings. Thereafter also, it has remained far too inadequate to provide the much need push to the sector to feed the growing population Also, serious efforts are needed to make the new manufacturing policy aimed at raising the share of manufacturing sector in the GDP to 25 per cent from the present is per cent and creating 100 million new jobs by 2025 a reality.


12th Plan: Some Employment-Related Ideas


Currently, India is passing through an unprecedented of demographic changes are likely to contribute to an ever increasing size of labour force in the country. The Census projection report shows that the proportion of population in the working age group (15-59 years) is likely to increase from approximately 58% in 2001 to more than 64% by 2021. But the overall population is not the issue the proportion of population in the working age group of 15-59 years will increase-from 57.7% to 64.3%. To put it another way, those in the 15-59 age-group would have increased by about 308 million during the period. The large numbers of the 15-59 year olds would also reflect in the workforce. It is estimated that by about 2025 India will have 25% of the world’s total workforce. But beyond 2025 the numbers of the numbers of the aged will begin to increase even more dramatically, and consequently the window of opportunity is between now and 2025.


To tap the demographic dividend, India needs better education and skills indicators and a much better 1abcur ecosystem. A huge challenge is to train a large number of youth in the skills which are required by the industry. The government has been attempting to improve basic education through a host of measures in recent decades and achieving same success. But, vocational education and imparting skills remains a critical area of concern.


The 12th Five Year Plan should aim at creating productive, gainful and sustainable employment opportunities with decent working conditions, therefore, ‘Skills led employment’ generation is a most sustainable employment generation strategy to address the needs of the technology driven employment market in the coming years. The projected unemployment rate of little more than 1 percent from existing 7-8 percent would require a comprehensive strategy addressing the skill development needs of the following three categories of persons:-


  • Existing workforce rendered unemployed due to technological obsolescene


  • Sector migrant workers from agriculture to industry and service sector.


  • Informal sector workers whose productivity and quality needs to be improved in order to enhance their employability and incomes.


The benefits of demographic dividend, with 54% people under the age group of 30 years, and the mean age of the country at 24 years, can be successfully reaped only through expanding education and skill development opportunities at a wider scale. This will include both software and hardware facilities, adequate number of and hardware facilities, adequate number of trainers and life-long training opportunities. It is indeed a matter of concern that only 5% out of 470 million Indian workforces is vocationally trained.


There is a massive opportunity for India to transform its vast manpower resource to a skilled and globally competitive workforce and emerge as a global leader in this space.


To Do


  • Setting up of Skill development centres through Public-Private Participation


  • Vocationalisation of Government Schools


  • New TTI and Polytechnics under PPP mode


  • Training of Trainers: The 12th five year plan should aim at teachers trainers programme to train at 10 million trainer’s total 250 million people across a wide range of trades.


  • The existing employment exchanges need to be restructured to provide skill mapping and counseling services.


The Areas to Concentrate are


  • agriculture


  • Food processing


  • Retail


  • Real Estate & Construction


  • Environment Capacity building and skill development in countering the environmental challenges is also a requirement for the small and medium scale industries. There is a need to create awareness about use and benefits of renewable energy and the ways by which locally available renewable soirees can be utilized domestically.


  • Health : Indian will need 7 lakh additional doctors by the year 2025 while the net addition presently is only 17000 per year. There is a great gap between number of Doctors and Nurses per 1000 population compared to developed and even developing countries. The challenge is therefore to rapidly build a vast quality health professional workforce and Correspon-ding health infrastructure to absorb them to salvage the situation.


  • IT : Human capital is one of the most abundant resources in India. It is essential to harness this resource to us maximum potential. ICT can act as a catalyst for skill development opportunities. ICT can be integrated within the education curriculum. It is essential to create IT-trained labour force to augment their employability, Common Service Centers can be leveraged to impart web based trainings and helps develop skills in rural areas. The lower pace of employment generation in comparison to addition to the labour force has been leading to a growth in the unemployment rate. Apart from urban areas, rural areas hold promise in helping IT- BPO companies in the generation of rural employment to sectors Planning Commission should give special incentive and categorise them as focused trades.


Q.6.     Write a short notes on National Rural Livelihood Mission?

Ans.     National Rural Livelihoods Mission (NRLM), one of the major new initiatives under the Ministry of Rural Development to bring the poorest of the viable livelihood opportunities to them was launched in Banswara, Rajasthan in mid-2011.


The Mission aims to ensure that at least one member from each identified rural poor household, preferably a woman, is brought under the Self Help Group (SHG) network in a time bound manner. NRLM would reach out mobilize and support 7 crore BPL households across 600 districts, 6000 blocks, 2.5 lakh Gram Panchayats, in 6 lakh villages across the country into their self-managed Self Help Groups (SHGs) and their federal institutions and livelihoods collectives. It would support them financially and institutionally. The poor would be helped to achieve increased access to their rights, entitlements and public services, diversified risk and better social indicators of empowerment.


As the success of Mahatma Gandhi NREGA has opened up new opportunities for those who have been benefited, NRLM tries to encourage the beneficiaries to move ahead for sustainable livelihood.


NRLM has been mandated to ensure adequate coverage of vulnerable sections of the society such that 50% of the beneficiaries are SC/STs. 15% are minorities and 3% are persons with disability, while keeping in view the ultimate target of 100% coverage of BPL families. A unique feature of the new initiative is that is would be led by the poor themselves, NRLM would utilize the services of Community Resource Persons (CRPs) who are women who have themselves come out of proverty through being a part of the Self Help Group. They will spread the concept of NRLM from one village to another and from one district to another making NRLM a people’s movement, NRLM is based on large scale successes in states such as Kerala, Andhra Pradesh, Tamil Nadu Bihar Madhya Pradesh where social mobilization and building strong institutions of the poor have led to significant reduction in poverty and empowerment of the poor. It will be a demand driven approach and the state will have the flexibility to develop their own action plans based on their local requirements and availability of resources.


The role of Banks will be of prime importance under NRLM as a source of credit for the poor at reasonable rates. NRLM will focus on getting banks to lend to the poor by making them bankable clients through smart use of subsidy. NRLM will focus on women as the best way of reaching out to the woman. There will be a special focus on vulnerable sections: scheduled tribes, scheduled castes, minorities, women headed families, etc. The second focus of NRLM would be rural youth of the country who are unemployed. They will be supported through placement linked skill development projects through which their skills will be upgraded through short term training courses in sectors which have high demand for services.


The launch of National Rural Livelihood Mission has been one of the planks of the Government towards poverty alleviation. It will lead to a life with dignity for the poor in rural areas who can sustain their livelihood through skill development and training at various levels with support from the Government. NRLM is the new version of Swarna Jayanti Gram Swarojgar empowerment of women by showing them sustainable occupations like PDS outlet etc; placement services and so on.

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