Understand key types and dimensions of unemployment in India relevant for UPSC Economics syllabus

Unemployment in India

• Definition of Unemployment Rate

  • The unemployment rate is the ratio of the number of unemployed persons to the total labour force, expressed per thousand.

• Unemployment Trends by Measurement Criteria

  • CDS criterion shows the highest unemployment rate, ranging from 6% to 8% (8.34% in 2004–05; 6.60% in 2009–10).
  • UPSS criterion shows the lowest unemployment rate, between 1.6% and 2.6%.
  • Under UPSS:
    • Unemployed persons increased from 7.37 million in 1993–94 to 11.21 million in 2004–05.
    • Unemployment rate rose from 2.18% to 2.60% in the same period.
  • Under CDS:
    • Unemployed persons rose from 19.07 million (1993–94) to 35.95 million (2004–05).
    • Unemployment rate increased from 6.03% to 8.34% during the same period.
  • In 2009–10:
    • UPSS rate: 2%
    • CDS rate: 6.6%
    • Despite rate decline, the absolute number of unemployed increased (NSSO, 66th Round).
    • The decline is attributed more to fewer people (especially women) offering themselves for work than to rising employment.

• Unemployment Rate by Criteria (Table 12.2)

  Year
  UPS
  UPSS
  CWS
  CDS
  1972–73
  —
  3.80
  1.61
  4.32
  1977–78
  8.35
  4.23
  2.47
  4.48
  1983
  8.18
  2.77
  1.90
  4.51
  1987–88
  8.28
  3.77
  2.62
  4.80
  1993–94
  6.09
  2.56
  1.90
  3.63
  1999–2000
  6.03
  2.81
  2.23
  4.41
  2004–05
  7.32
  3.18
  2.33
  4.53
  2009–10
  8.34
  2.50
  2.00
  6.60
  Source: India Labour and Employment Report, 2012

• Rural vs. Urban Unemployment

  • Usual Status (UPS) unemployment in rural areas: ~2%.
  • Urban unemployment rates are generally higher except under CDS, where rural areas showed a higher rate (~6.8%).

• Gender and Unemployment

  • Unemployment is higher among females in both rural and urban areas.
  • Female unemployment rates: 19% to 21.5% between 1993–2005.
  • Male youth unemployment: rose from 13.7% (1993–94) to 14.7% (1999–2000), then declined again to 13.7% in 2004–05.

• Youth Unemployment Trends

  • Youth (15–24 years) unemployment is highest:
    • 11% in 1993–94
    • ~15% in 2004–05
    • ~14% in 2009–10
  • This age group accounted for 21% of the workforce in 2004–05.
  • New labour market entrants are more likely to be unemployed.

• Youth Unemployment by Age Group (Table 12.3)

  Age Group
  1993–94
  2004–05
  2009–10
  15–24
  11.2
  14.8
  14.3
  25–34
  6.6
  8.5
  6.6
  35+
  3.3
  5.3
  4.2
  Total
  6.0
  6.3
  6.6
  Source: NSS Report 515

• Unemployment in Rural Agricultural Households

  • CDS-based unemployment rate for agricultural households rose from:
    • 9.50% in 1993–94
    • 12.29% in 1999–2000
    • 15.26% in 2004–05

• Structural Causes and Recommendations

  • Educational and training systems are increasingly misaligned with emerging job opportunities.
  • Gender discrimination in labour markets adds to the problem.
  • Key recommendations:
    • (i) Expand and diversify the economy, especially rural sectors.
    • (ii) Restructure education and skill development to align with labour market needs.
    • (iii) Eliminate gender bias in the labour market and training programs.