Unemployment is the greatest economic challenge facing India. Discuss the various steps taken by government for job creation and also suggest some structural changes to tackle the problem.

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Unemployment is the greatest economic challenge facing India. Discuss the various steps taken by government for job creation and also suggest some structural changes to tackle the problem.
Approach:
  • Give a brief introduction about present condition of employment in India.
  • Then discuss steps taken by government for job creation
  • Then suggest some structural changes.
  • Conclude appropriately.
Model Answer :
India’s economy may be growing more than twice as fast as the rest of the world but the story on the jobs creation front is just the opposite. According to the Ministry of Labor and Employment, only three out of every 500 registered job-seekers secured employment in 2015. Also, over 30% of youth aged 15-29 in India are not in employment, education or training, posing an economic and social challenge.
Steps taken by government for job creation:
  1. Prime Minister Employment Generation Programme- To bring together widely dispersed traditional artisans/ rural and urban unemployed youth and give them self-employment opportunities to the extent possible, through financial assistance to set up new enterprises
  2. National Rural Employment Guarantee Act 2005- It aims at enhancing the livelihood security of people in rural areas by guaranteeing 100 days of wage employment in a financial year.
  3. Pradhan Mantri Mudra Yojana (PMMY)- To provide formal access of financial facilities to non-corporates, small businesses.
  4. Promoting MSMEs: Promotion of MSMEs due to their job creation potential, including tax breaks
  5. Make in India: Through this initiative, government attempts to transform India into a global design and manufacturing hub as well as generate large-scale employment.
  6. Startup India: Startup India campaign is based on an action plan aimed at promoting bank financing for start-up ventures to boost entrepreneurship and encourage startups with jobs creation.
However, the economy is afflicted with certain structural deficiencies, like predominance of services sector (with less employment potential), large informal sector employment etc.  They need to be rectified for the economy to realize its full potential and secure employment to millions.
Some of the structural changes that are needed include:
  • Reduction in the workforce employed in agriculture. As of 2011-12, agriculture employs 50% of the workforce but only account for 18% of gross domestic product (GDP).
  • The need to shift from informal sector employment to formal sector employment. The NSS data showed that as many as 85% of these were in the “informal sector”, including both self-employmed and wage-employed.
  • Focus on export-oriented labor-intensive sectors such as apparel and leather as they have both export and large employment potential.
India is facing the challenge both of creating of new jobs and improving the quality of existing jobs. Structural changes in the economy and faster economic growth are the key to meet this challenge.

Subjects : Economy