- Efforts made by government to revive job growth
- Unemployment scenario in India
How to revive job growth in the country?
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The central government proposed interventions to propel the job growth in various sectors in recently launched Union Budget of 2019-20.
Efforts made by government to revive job growth:
- The centre had made some efforts in the Union budget to promote jobs in the micro, small and medium enterprises (MSME) and in the construction sector (both rural and urban).
- It announced 2% interest subvention for MSMEs under the Goods and Services Tax (GST) on fresh or incremental loans.
- Under the Pradhan Mantri Awas Yojana (PMAY), the budget proposed 1.95 crore houses under the PMAY-Grameen scheme and 19.5 million houses under PMAY-Urban scheme between 2020 and 2022.
- However, these actions are not suffice given the need for jobs.
Unemployment scenario in India:
From 2004 to 2012:
- Between 2004-05 and 2011-12, about five million workers per annum left agriculture for non-farm sector jobs.
- Among these five million, about 75% were youth between 15 to 29 years.
- This led to tightening of the rural labour market that resulted in wage rising. Wage rising was stagnant between 1996 and 2004 because of a rising number of workers in agriculture.
- However, there has been a slowdown in non-agricultural job creation post 2012.
- The unemployment is mainly in manufacturing and construction sector and much less in modern services such as banking, airlines etc.
- There was a manufacturing job decline post 2012.
- The share of manufacturing in employment has fallen from 8.1 to 7.7 % for rural males (2012 to 2018) and 9.8 to 8.1% for or rural females.
- This is significant as over half of the manufacturing output in India is contributed by rural areas.
- Similarly, for urban females, the share of manufacturing in the employment share fell from 28.7% to 25.2%, while the share of urban male stagnated at 22.4%.
- The five labour-intensive manufacturing sectors (food processing, textiles, garments, wood and furniture, leather and footwear) saw absolute job losses.
- There was growth of jobs only in the services sector due to the expansion of modern services during the post-2012 period.
- While construction was a major employment generator between 2005 and 2012, it registered a much slower growth of jobs after 2012.
- As per the Periodic Labour Force Survey (PLFS), there is a slow job growth in the non-agriculture sectors.
- The unemployment rate is the highest in last 45 years that grew from 2.2% in 2011-12 to 6.1% in 2017-18.
- Moreover, there is a massive rise in the youth open unemployment rate particularly for educated youth.
- The educated youth open unemployment rate is more than double for urban male urban female and rural females. Also, unemployment rate is more than triple for rural males.
- Increase public investment in social services (health and education) as it will create jobs in the government.
- India can reverse the poor manufacturing performance since 1991 with an industrial policy that has seven components:
- Reverse inverted import duty structure in a range of manufactures that allows finished manufactured imports at low duty/no duty but discriminates against intermediates/raw materials imports for domestic manufacture.
- Provide policy packages for labour-intensive manufactures.
- Improved cluster development for micro, small and medium enterprises.
- Target urban infrastructure development through Atal Mission for Rejuvenation and Urban Transformation (AMRUT) scheme.
- Speed up the five industrial corridor development to enable India to engage in global value chains.
- Prioritise mineral development as a foundation for domestic processing.
- Promote firm-level design capability and private Research and Development investment.