employment generation program

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Please cite this Art icle as : , : Golden Research Thoughts (Aug. ;2012)

S.V.Sowani Indian Employment: Pre And Post Reform

Volume 2, Issue. 2, Aug 2012

Golden Research Thoughts

(1) Economic reforms programme now being pursued in India has almost ignored growth of employment

and its quality(2)The design of the policy is to make capital relatively cheap in relation to labour thus destroy the Indianadvantage(3)During the post reform period private sector has stolen the pace over that of public sector(4)Economic reforms have bypassed agriculture and rural development prospects.

MEASURES

Employment generation should be the single most important criteria for investment policy.Rising of the domestic savings and generation of the domestic resources.There is need to reformulate economic policies. The private sector has to be more humane and the publicsector more cost efficient.

Implications of economic reforms initiated and pursued by the Government of India in the framework ofliberalization and globalization for the creation of gainful employment opportunities. The Indianexperience with regard to the crucial dimensions of growth and inflation since the early seventies bears outthat the economy has had to pass through some exceptionally difficult periods such as during the oil priceshocks of the early and late seventies. These shocks were absorbed mainly in the terms of sharp setbacks inthe rate of output growth and unacceptable increase in the rate of inflation. Visibly supported with fiscal

stimuli, the gradual recovery that materialized during the eighties as reflected in an improvement ineconomic growth and an abatement of inflationary pressures was somewhat weak until 1988-89 where afterthe average growth rate edged upwards to 6.0 per cent mark for the remaining part of the nineties. Since1990s, Indian economy is passing through a period of an economic crisis. In order to place the economyback on the path of high and sustainable growth Government of India introduced certain economic reformsincluding Liberalization, Privatization, Globalization (LPG) from June 19991 and even now, the reformsbeing continued. The influence of macro economic environment on the industry speeds ahead economygenerates more jobs and higher levels of wages and income through increasing productivity. To achieve

Abstract::Implications of economic policies initiated and pursued by the Government for thecreation of gainful employment opportunities. After independence, when India initiatedthe programme of economic development through planning mechanism, neither of thetwo prevalent economic theories i.e. the Keynesian theory of effective demand and theneo-classical theory of flexible wage rates was not found suitable to the Indianconditions. This is the labour surplus but capital scarce economy was far from beingfound.

ISSN:-2231-5063

Indian Employment: Pre And Post Reform

S.V.Sowani

Associate Professor & Head,Deptt. of EconomicsC.T.Bora College, Shirur (Ghodnadi) Dist Pune Maharshtra 412 210

Email : [email protected]

Available online at www.aygrt.net

ORIGINAL ARTICLE

GRT


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these objectives, series of outward oriented policy changes i.e. industrial reforms, fiscal reforms, monetaryreforms, trade policy reform etc. were introduced. An economic reform has been evolving historically andbeing propelled forward with incredible speed by the technological revolution.

Employment policy before the Reform period: The concept of unemployment in general is quitevast and also quite well discussed. However unemployment is more of a problem than of a concept, which isfaced by almost all the economies of the world. The worst affected are the developing countries like Indiawhere the problem has grown and has taken a massive size of population. After independence, when Indiainitiated the programme of economic development through planning mechanism, neither of the twoprevalent economic theories i.e. the Keynesian theory of effective demand and the neo-classical theory offlexible wage rates was not found suitable to the Indian conditions. The Keynesian fiscal policy measures toraise effective demand become fruitful only with the assumption of excess capacity. This is the laboursurplus but capital scarce economy was far from being found. Again the policy of increasing employmentby lowering an already low wage level practically prevented the use of the new-classical approach offlexible wage rates of clearing the labour market in India. So the question arises, what was the specific

strategy, which was taken up by the policy makers to reduce unemployment and generate employmentpossibilities.

The Employment Scenario: Indian economic development under different plan periods the rate ofgrowth of output has never been integrated with the rate of growth of employment. Accelerated economicgrowth has always been found to be favorite with the Indian planners. From the very first plan this conceptof economic growth was very much interlinked with the increase in the employment opportunity, reductionof income inequality and poverty through there was an initial debate whether reduction of incomeinequality was conducive to growth or not. It was posed that reduction in income inequality would retardsavings and hence capital formation in the LDCs, which would slacken economic growth.

Growth of employment by Sector:

The employment generation in sartorial base i.e. primary, secondary and tertiary sectors it is fined that inpre reform and reform period the attitude of employment opportunity is in increasing trend. Following tableindicate the growth of employment in sartorial base

2Indian Employment: Pre And Post Reform

Golden Research Thoughts Volume 2 Issue 2 Aug 2012

Plans Annual GDP

Growth Rate (at

constant price)

Growth of

Employment

First Plan (1951-56) 3.7 0.39

Second Plan (1956-61) 4.2 0.87

Third Plan (1961-66) -3.8 2.03

Fourth Plan (1969-74) 3.4 1.99

Fifth Plan (1974-78) 5.0 1.84

Sixth Plan (1980-85) 5.5 1.89

Seventh Plan (1985-90) 3.6 1.26

Eight Plan (1991-96) 6.7 1.86

Ninth Plan (1997-2002) 7.7 1.14

Tenth Plan (2002-2007) 7.2 1.23

Eleven Plan (2007 -2012) 7.5* 1.82*

Source: Plan Documents (* Approximate)

Economic Sector Employm ent Generated in Million

1983 1993 2000 2010

Primary Sector 208.99 (69.0) 245.16 (65.5) 239.83 (60.4) 228.43 (55.07)

Secondary sector 41.66 (13.8) 55.53 (14.8) 66.91 (16.8) 78.12 (18.82)

Tertiary sect or 52.11 (17.2) 73.76 (19.7) 90.26 (22.7) 108.35 (26.11)

Total Employment 302.76 (100) 374.45 (100) 397.0 (100) 414.90 (100)

Source: Compiled and computed form the data provided by the Planning Commission Report to Task Force on

Employment Opportunities.


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The growth rates of unemployment and labour force derived from NSS data are given in the above table, thefollowing points emerge.1. The growth rate of employment declined from 69% to 55.07% in agriculture, mining and otherproduction unit in primary sector.2. Indian economy known as rural and agro-based economy. Majority population stayed rural India, but theemployment opportunities is declined by 14.03%. It affects to decline purchasing power parity, compulsorymobility toward urban sector etc.3. Secondary sector witnessed an employment growth from 13.8% to 18.82%. It is an indication ofdevelopment theory regarding transfer population from primary sector to secondary sector.4. In the tertiary sector the growth rate of employment was high. It increase 17.2% to26.11%, the growth rate is near about ten per cent.5. Employment opportunities were increase in the reform period i.e. 112 million new jobs increase lasttwenty years.

Unemployment Rate- Urban and Rural Differences: In the pre- reform period the data reveal thatunemployment rates are, traditionally higher in urban areas than in rural areas. As against an unemploymentrate of 10.3 per cent in 1977 in urban areas, the rural unemployment rate was 7.7 per cent. There was asignificant fall in the rural unemployment rate in 1990 to 5.3 per cent, but the urban unemployment rate wasof the order of 9.4 per cent, significantly higher because Indian economy was in savior economic crisis.After the period of reform, rural unemployment rate again increased to 7.2 per cent in the year 2000 andagain 8.1 per cent in 2010 while urban unemployment also marginally increased to 7.7 per cent in the year2000 and again decrease to 7.9 per cent in 2010. Following table indicate the unemployment among Urbanand Rural sector.

Unemployment among Urban and Rural sector(As per cent of labour force)

Issues of Employment Generation: The appropriate strategy of economic reform with an eye toemployment friendly development. Man is the object of development, any strategy of developmentdepends on employment. The rate of growth of capital, technology and technical progress, skilledmanpower development etc has to be circumscribed by the requirement of the target rate of growth ofemployment. Considering the issues of employment generation in reform period it is observed that theemployment generation policies adopted are not positively acted.

1.In reform period the role of multinational corporations are accepted for generate the employment inmanufacturing sector. The multinational as part of their marketing strategy try to ensure that capital-labourratio is substantially increased to give them advantage in competition since they are familiar and equippedwith highly capital intensive technology they have little concern for the growth of employment in Indiasince the market they target bypass the people who live by the sweat of their brows, and ignored theobjective of employment.2.Economic reforms programme now being pursued in India has almost ignored growth of employment

and its quality. Further the objective regarding the rate of growth of output has been paid only lip service. Atree is generally known by its fruits and as the role of reform it works as per the market and not theobjectives.3.The design of the policy is to make capital relatively cheap in relation to labour and thus destroy the Indianadvantage of cheap labour in the international arena.4.During the post reform period private sector has stolen the pace over that of public sector in respect ofgrowth rate of employment. Though the signals of employment opportunities are good but it witnessed

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Period Rural Areas Urban Areas

1977 7.7 10.3

1990 5.3 9.4

2000 7.2 8.1

2010 7.7 7.9



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growth in the volume of employment, there is much to worry about the slow-down in real wage earningsand deceleration in the quality of employment.5.Contract labour system introduced in reform period by private sector with the help of labour reform. Theemployment generation in the form of contract labour affect on the security aspect as well as socio-economic welfare of employees.6.The Government has been vigorously follow the disinvestment policy in Public sector enterprises. Therestructuring of public sector undertakings adversely affected on employment generation in public sector.At the same time the voluntary retirement scheme introduced to restructuring the business and rationalizingindustry.7.Economic reforms have bypassed agriculture and rural development prospects. Thus rural economy andagricultural sector has shown a very low rate of growth. In the reform period, in comparison with workforcein rural sector and the availability of employment opportunity is widen. The unemployment problem inrural and agriculture sector is savior in present days.

Employment Generation Programmes adopted by Government in Reform Period

Growth rate of GDP, Foreign Direct Investment, wide scope to Multi-National Enterprise's, Reforms invaries sectors like labour reform, wage reform, financial sector reform, tax reform etc are not work as perthe objectives to generate employment. For the purpose of employment generation several specialprogrammes are being implemented by the Government both in rural and urban areas during the reformperiod.

1.Employment Assurance Scheme (EAS) The EAS was launched form 2nd Oct 1993 in 1778development blocks in the rural areas of 261 districts. The main objective of this scheme is to provideemployment of not less than 100 days to every desirous person aged between 18 to 60 years during the leanagricultural season.

2.Prime Minister's Rozgar Yojana (PMRY)- PMRY was also introduced on 2nd Oct 1993. Under thisscheme every selected educated unemployed youth in the group of 18 to 40 years and having family incomebelow Rs. 40000/- is provided a loan up to Rs. one lakh for opening his own enterprise.

3.Rural Employment Generation Programme (REGP)- REGP launched in 1995 with the objective ofcreating self-employment opportunities in the rural area and small towns. Under REGP, entrepreneurs can

establish village industries by availing of margin money assistance for maximum Rs.25 lakh.

4.Swarnajayanti Shahri Rozgar Yojana (SJSRY)- SJSRY is operational since Dec 1997. This schemeprovides gainful employment to urban unemployed and underemployed.

5.Swarnajayanti Gram Swarozagar Yojana (SGSY):- SGSY was launched in April 1999 afterrestructuring of IRDP and allied scheme. It is the only self-employment programme currently beingimplemented. Up to April 2009 the total allocation of Rs 8930 crore was made available by the Governmentto 74.92 lakh Swarozgaris.

6.Sampoorna Grameen Rozagar Yojana (SGRY)- SGRY was launched in Sep 2001, merging theongoing scheme of Jawahar Gram Samridhi Yojana (JGSY) and Employment Assurance Scheme (EAS).The objective of this programme is to provide additional wage employment in the rural areas as also foodsecurity, along with the creating of durable community, social and economic infrastructure in rural areas.This programme is open to all rural poor who are in the need of wage employment and desire to do manualand unskilled work in and around the village.

To generate employment in Indian economy there is need overall sectoral increase in labour resources asper the share of GDP. The employment generation also widely spread in private-public sector, urban-rural

sector etc. So to generate employment, the private sector has to be made more humane and the public sectormost cost efficient. The operation of the market mechanism in a labour surplus economy shall hardly beable to humanize the private sector. The state should be assigned a positive role. For enlarging employment,the emphasis shall have to be shifted from corporate sector or organized medium and large scale sector tosmall scale sector and modern service sector. It is imperative to place greater emphasis on rural andagricultural development for designing machinery and equipment so as to employ more labour and lesscapital particularly in agriculture and agro based industries. The draft of twelth plan envisaged inclusive

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