Macroeconomics &

Business Environment

18
Nature and Trends of
Unemployment in
India

PREPARED BY:

Pyare Lal Verma, Faculty Eco/QM

 18
Session

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

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18.1 Nature of Unemployment in India
Session

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
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18.1 Classification of unemployment in India
Session

a) Urban Unemployment
i. Industrial unemployment
ii. Educated unemployment
b) Rural Unemployment
i. Open unemployment
ii. Disguised unemployment
iii. Seasonal unemployment
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18.2 Estimates of unemployment in India
Session

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.
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18.2
Session
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.
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18.2
Session
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.
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18.2
Session
Estimates of Unemployment during eighties

Status 1972-73 1977-78 1983 1987-88

Usual Principal Status - 4.23 2.77 3.77
Usual Principal & Subsidiary 1.61 2.47 1.90 2.62
Status
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.
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18.3
Session
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
Projects of durable nature
(1972)
DPAP (1973)
Command Area Development Program
(1974-75) Area Development Program
Hill Area Development Program (1974)
Desert Development Program (1977-78)
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18.3
Session
Employment Guarantee Program

Program
Food for Work Program (FFWP) 1977
Training for Rural Youth in Self
Employment (TRYSEM) 1979
National Rural Employment Program
(NREP) 1980
Integrated Rural Development Program
(1976-80)
Development of Women and Children in
Rural Areas (DWCRA) 1982-83
Rural Landless Employment Guarantee
Program (RLEGP) 1983
Self Employment Scheme for Educated
Unemployed youth (SEEUY) 1983-84
Objective
Create durable community assets
and social infrastructure
Provide technical skill to 18 to 35
years youths
Restructured and renamed FWP to
tackle seasonal unemployment
Provide self employment and raise
level of income
Supportive program for IRDP
Program to supplement NREP, 100
day employment to one member of
landless family
18-35 year old
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18.3
Session
Employment Guarantee Program

Program
Self Employment Program for Urban Poor
(SEPUP) 1986-87
Jawahar Rojgar Yojana (JRY) 1989
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
National Rural Employment Guarantee
Act (NREGA)
Objective
Families coming under BPL
Merging NREP and RLEGP
JRY for rural areas and NRY for
urban areas
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
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18.3
Session
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
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Session

THANK YOU