Causes of Unemployment in India

There is no single factor that causes widespread unemployment in India. Many reasons together are responsible for the same. Some of the essential causes of unemployment in India are as follows:

1. Slow Economic Growth: The Indian economy is underdeveloped and growing at a very slow pace. The actual growth is always low as compared to the targeted rate in the five decades of planning. For the expanding labour force, slow growth rates are unable to produce enough work opportunities. The labour force is substantially larger than the number of available job opportunities.

2. Fast-Growing Population: In India, population growth has been a severe issue. It is a significant element in the unemployment rate. The amount of unemployment has increased despite the completion of twelve five-year plans.

3. Agriculture is a Seasonal Occupation: India’s underdeveloped agricultural sector provides employment seasonally. It is undoubtedly the main industry in our nation, and a sizable portion of the people depends on it, yet due to its seasonal nature, farming does not offer consistent employment to farmers throughout the year. On average, farmers are idle for three to four months a year. Approximately, 15% of the working population in agriculture is considered to be unemployed.

4. Lack of Irrigation Facilities: Despite years of planning, there are still few irrigation infrastructures, with only 44% of agricultural land being covered. Only one crop at a time, or monocropping, became necessary for a want of irrigation. The lack of multi-cropping means that employment options are still limited.

5. Defective Educational System: The existing education system in India is not good and full of defects. Even though various engineering, management, and other educational institutes are providing a number of engineers, MBAs, etc., due to lack of vocational and technical training, they are unable to meet the given job requirements of companies and hence remain unemployed.

6. Decline of Cottage and Small Industries: The potential for self-employment in India has been seriously affected by the decline of the cottage and small industries under the British government. In addition, due to shifting consumer preferences and the emergence of more productive contemporary businesses, a number of traditional village and cottage industries have diminished over time. After independence, a major industry replaced a small industry, but this did not result in the expected level of employment opportunities.

7. Low Savings and Investment: Capital is scarce, and even when it is scarce, it is not being used properly to eliminate unemployment. The majority of the capital has been allocated to large-scale enterprises with high capital intensity per labour unit. Labour productivity per unit of capital is still quite low.

8. Limited labour Mobility: In India, labour mobility is quite low. Even when opportunities are available in distant locations, many are reluctant to relocate due to a variety of family and social restraints. The diversity of languages, religions, and customs among states is a fundamental barrier to labour mobility. Greater unemployment is associated with less mobility.

9. Low Capital Formation: The potential for expansion in the agricultural and industrial sectors has been restricted by low capital formation. As a result, the capacities of both sectors to create jobs have been adversely impacted.

10. Family Planning: The measures could not prevent the rural population from migrating to cities. The plans failed to promote the use of labour-intensive agricultural and industrial production methods. Plans have not given employment-creating initiatives like dairy expansion, fisheries, and poultry farming enough attention. The expansion of employment prospects has been limited by insufficient infrastructure.

Briefly, a high rate of population growth results in an exponential rise in the demand for jobs, whereas a low pace of economic growth only creates a small number of employment opportunities. As a result, there is usually a fairly large gap between the supply and demand of labour. The country’s group integration is under threat as the unemployment rate grows to monstrous proportions.

Unemployment is one of the most important problems that can be found in any country in the world, regardless of its economic condition. Unemployment is defined as a condition wherein people are able and willing to work at the current wage rate but cannot find work. Some skilled workers struggle to find employment for extended periods, thus, unemployment is not just confined to low-skilled employees. There are various methods for identifying an unemployed person. Some economists believe that a person is considered unemployed if they cannot find a job for even one hour during a half-day.

Key Takeaways:

• Unemployment in India is not just about job scarcity but also about the mismatch between skills demanded and skills possessed by the workforce.
• A significant portion of India’s workforce is employed in the informal sector, where job security and benefits are often lacking.
• Global economic trends and events can also impact unemployment in India, such as fluctuations in global markets, trade policies, and geopolitical tensions.
• The Indian government has launched various schemes and programs aimed at tackling unemployment, such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Skill India Mission, and Startup India.