Indian Economy

Social Sector Initiative

In the recent past, there has been deceleration in the growth of employment in India in spite of the accelerated economic growth. This can be explained in terms of steady decline in employment elasticity in all the major sectors of economic activity except in construction. Overall employment elasticity declined in India from 0.52 during 1983 to 1993-94 to 0.16 during 1993-94 to 1999-2000. As would be clear the decline was quite fast in agriculture as it declined from 0.70 during 1983 to 1993-94 to 0.01 during 1993-94 to 1999-2000. According to T. S. Papola, the decline in employment elasticity in the agriculture “is found to be due primarily to the sharply declining and even negative elasticities in a few regions - Punjab, Haryana and Uttar Pradesh - where the green revolution has resulted in significant yield and output growth.’

C.P. Chandrasekhar has also argued that economic growth in India in recent years has not led to much employment generation. He states, “India’s trajectory of growth is not matched by employment generation. This will lead to social unrest unless the government rethinks its economic priorities.

For three years running, the rate of growth of the Indian economy has been extraordinary. The growth rate of the gross domestic product (GDP) is estimated at between 7.5 and 8.5 per cent in the years 2003-04, 2004-05 and 2005-06. While these figures conceal sectoral differences, such as the extremely poor performance of agriculture and the disproportionately high rate of growth of services, they are indeed remarkable. But new evidence suggests that this may not help resolve India’s principal economic problem: its large and growing reserve of unemployment.”

Jeemol Unni and G.Raveendran in their study have shown how in recent years employment trends have moved. They have noted on the basis of data from Full Employment-Unemployment Round (61st Round, 2004-05) of the NSS that the workforce increased to nearly 457 million with a substantial unemployed population of 11 million. This implies that the number of unemployed persons grew substantially in this period compared to mid and late 1990s (1993-94 to 1999-2000).

Their study also reveals sharp decrease in the rate of employment generation during the mid and late 1990s in both rural and urban areas (see Table =). The overall growth in employment declined from 2.01 per cent per annum during 1983 to 1993-94 to 0.98 per cent per annum during the period 1993-94 to 2004-05. As is clear from data contained in Table 12.2, growth rate of employment declined steeply in the rural sector during the period 1993-94 to 2004-05.

Structure of Employment

The structure of employment can be followed by examining the sectoral distribution of employment, employment in organised sector, and rural and urban employment.

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