Bharat......... “The Development Dilemma” ( India Challenge Series - 20 ) Unemployment: Preventing Economic Development https://youtu.be/GqDyeuSEYA4 https://youtu.be/t0G0KdSHbN4 Author :  CA  A. K. Jain Unemployment remains one of India’s most critical socio-economic challenges, impeding equitable growth despite sustained GDP expansion. It undermines productivity, reduces aggregate demand, and exacerbates inequality. With unemployment hovering around 6-7% and youth joblessness exceeding 20%, the problem has become structural, deepened by rapid population growth, skill mismatches, gender disparities, and the dominance of informal work. The Current Landscape According to CMIE data, India’s unemployment rate has fluctuated over the last decade-from 5.4% in 2014 to a peak of 10.05% in 2023, before stabilizing near 7%. The COVID-19 pandemic aggravated the crisis, particularly affecting informal and low-skilled workers. Youth unemployment, above 20%, represents both a demographic challenge and an economic opportunity lost. State-level variations are striking. In 2022, Rajasthan (23.8%), Haryana (22.9%), and Jammu & Kashmir (23.2%) recorded the highest unemployment rates, while Chhattisgarh (0.1%), Assam (0.4%), and Uttarakhand (0.5%) fared much better. These regional disparities reveal uneven development and policy implementation across India’s federal structure. Underlying Causes 1. Population Pressure: Rapid population growth continually expands the labour force, outpacing job creation and intensifying competition for limited employment opportunities. 2. Skill Mismatch: A glaring gap persists between educational outcomes and industry needs. About 33% of graduates remain unemployed due to poor vocational alignment. 3. Structural Inefficiencies: Rigid labour laws, bureaucratic hurdles, and slow manufacturing growth (just 15% of GDP) constrain job expansion. 4. Informal Sector Dominance: Over 80% of India’s workers operate informally, lacking job security, social protection, and decent wages. 5. Cyclical Slowdowns: Economic shocks such as COVID-19 cause temporary layoffs and exacerbate unemployment cycles. Together, these factors produce both open unemployment and underemployment, trapping large segments of the workforce in low-productivity, insecure livelihoods. Strategic Solutions and Policy Measures To tackle unemployment comprehensively, India requires simultaneous action on skill development, policy reform, infrastructure creation, and entrepreneurship promotion. 1. Skill Development Initiatives The Skill India Mission (2015) has sought to unify skill training efforts across states and sectors. The Pradhan Mantri Kaushal VikasYojana (PMKVY) alone trained over 6.9 million youth by 2023, achieving a placement rate near 54%. The National Apprenticeship Promotion Scheme (NAPS) also encourages industry-led apprenticeship, with over 250,000 enrollees. Despite progress, skill quality and employability alignment need strengthening. 2. Labour Market Reforms The four Labour Codes (2019-2020)-on Wages, Industrial Relations, Social Security, and Occupational Safety-simplify 29 old laws to improve ease of doing business and formalize employment. Data from the Labour Bureau’s Quarterly Employment Survey (QES) shows post-reform employment growth of 3% in manufacturing, aided by regulatory flexibility. However, effective implementation across states remains crucial. 3. Employment Guarantee Schemes The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) remains India’s largest social security program, guaranteeing 100 days of work annually to rural households. In 2024-25, it generated 476.5 million person-days and employed nearly 130 million workers. Over 55% of beneficiaries are women, marking significant gender inclusion. However, inefficiencies persist-45% of wages were delayed in 2021-22, and asset maintenance remains poor. Many states fail to provide the full 100 days of work. Strengthening monitoring, reducing corruption, and ensuring timely digital payments are vital for maximizing MGNREGA’s impact. 4. Entrepreneurship and Start-ups The Startup India initiative, launched in 2016, catalyzed innovation and job creation. As of early 2024, India had 84,000 recognized start-ups, creating over 800,000 direct jobs and millions of indirect ones. Start-ups like Ola, Byju’s, and Swiggy exemplify the job multiplier effect in the digital economy. Similarly, the Pradhan Mantri Rojgar ProtsahanYojana (PMRPY) incentivized formal job creation by reimbursing EPF contributions for new employees, benefitting over 1 million workers. Despite early gains, the scheme ended in 2019, limiting its long-term impact. 5. Strengthening the MSME Sector Micro, Small, and Medium Enterprises (MSMEs) employ about 45% of India’s manufacturing workforce. Key government schemes include: • PMEGP: Over 700,000 projects financed, generating 5.4 million jobs. • MUDRA Yojana: Rs. 15.75 lakh crore disbursed to 280 million beneficiaries. • CGTMSE: Over 50 lakh credit guarantees approved, covering Rs. 2.5 lakh crore in loans. • ECLGS (Atmanirbhar Bharat): Provided crucial liquidity during COVID-19. These initiatives have substantially expanded self-employment but face hurdles like credit access and uneven regional outreach. 6. Social Security and Pension Coverage The Atal Pension Yojana (APY) extends retirement security to informal workers. With over 60 million subscribers, it provides guaranteed monthly pensions up to ₹5,000. However, a 70% dropout rate and low benefit levels limit its effectiveness against inflation. 7. Job Matching and Career Services The National Career Service (NCS), launched in 2015, integrates job listings, counselling, and training. It has 95 million registered job seekers and facilitated 10 million placements. Yet, underutilization of funds and limited outreach in rural areas hinder its full potential. Digital job fairs and collaborations with private firms have shown promise, especially for women and rural youth. Role of Foreign Direct Investment (FDI) India’s FDI inflows reached $971.5 billion (2000–2023), driven by services, IT, and manufacturing sectors. FDI has catalyzed employment in auto manufacturing (Hyundai, Honda, Suzuki) and IT/BPO industries, which now employ 4.5 million workers. However, benefits are uneven-urban concentration, automation, and limited rural spillovers persist. In retail, FDI’s job creation has been modest, occasionally displacing small traders. For FDI to sustainably generate employment, it must be coupled with skill-building, regional development, and labour-intensive sector incentives. Persistent Challenges Despite these programs, India’s unemployment ecosystem faces deep-rooted barriers: • Informal Sector Dominance: Over 80% of workers lack formal contracts or benefits. • Underemployment: Many graduates work below their skill level, reflecting education-job mismatch. • Stagnant Manufacturing Growth: Despite “Make in India,” manufacturing’s GDP share remains around 15%. • Low Female Participation: Women’s labour participation at 21% (2021) remains among the world’s lowest. • Rural-Urban Divide: Urban unemployment (8.9%) outpaces rural (6.1%), driving distress migration. • Implementation Inefficiencies: Delays, corruption, and poor planning plague programs like MGNREGA and NCS. • Youth Joblessness: The 15-29 age group records unemployment near 21% (PLFS 2022–23). • Gig Economy Insecurity: With 23.5 million gig workers, social security remains inadequate. • Overreliance on Government Jobs: Despite 22% vacancies in central posts, private-sector employment remains insufficiently incentivized. Role of International Organizations The United Nations and International Labour Organization (ILO) assist India through technical support, labour standards, and policy guidance. However, limited enforcement capacity, funding constraints, and complex domestic labour conditions reduce their tangible impact. The ILO promotes decent work and skill redistribution but warns of challenges like “brain drain” and inadequate migrant integration. The Way Forward India’s unemployment crisis requires a multi-pronged, coordinated approach emphasizing inclusive, skill-intensive, and sustainable job creation. Key priorities include: • Consolidating Schemes: Merge overlapping initiatives for efficiency and stronger accountability. • Expanding Formal Employment: Simplify compliance for MSMEs and incentivize job formalization. • Bridging the Skill Gap: Align vocational education with industry needs, especially in digital and green sectors. • Women’s Empowerment: Enhance safety, childcare, and flexible work options to raise female participation. • Balanced Regional Development: Promote investment in tier-2 and tier-3 cities through targeted incentives. • Strengthening Monitoring: Use real-time data systems to track program outcomes and wage disbursements. • Social Security Expansion: Extend pension, insurance, and health benefits to gig and informal workers. Conclusion Unemployment in India is not merely a statistic-it represents a systemic challenge that constrains national progress. Despite commendable initiatives such as Skill India, MGNREGA, Startup India, and MSME support, the persistence of informality, gender gaps, and skill mismatches hampers inclusive growth. Effective governance, policy coordination, and private-sector collaboration are imperative to convert India’s demographic dividend into a demographic advantage. Only through sustained investment in human capital, entrepreneurship, and equitable opportunity can India ensure that economic development translates into meaningful employment and shared prosperity. ---------------------------------------------------- About The Article This article is the extract of one of the chapter of the best-selling book on Indian Macro-Economics, titled.... Bharat........” The Development Dilemma" authored by CA Anil Kumar Jain. “This book is a must-read for every aware and enlightened citizen. It presents an in-depth analysis of the challenges faced by an emerging India and offers innovative suggestions and practical solutions to overcome them, paving the way for our nation to attain the esteemed position of Vishwaguru in the near future.” The book is available at Amazon, Flipkart, Google Play Books and Ahimsa Foundation (WhatsApp Your Request - 9810046108).