Every seventh person in the world is an Indian and every third poor person in the world is also an Indian. The statistics speak about the gravity of the problems of unemployment and poverty which demand and immediate solution. It has been observed that with the increase in the number of unemployed persons poverty expands. Keeping in view this fact, removal of unemployment has been mentioned as one of the objectives of economic planning in all five year Plans, but it has been given serious consideration only after Fifth Plan. Till Fifth Plan, there was no serious concern in the formulation of the strategy for compatibility of employment targets with the various output and investment targets.
It was assumed that the gains of economic growth would percolate downwards and thus inequalities would decline and problems of poverty and unemployment and would be automatically solved. The growth of employment and removal of poverty were taken for granted. The connection between economic growth and other objectives as stated above is not as simple as its is often believed in this country. It has been observed in a number of less developed countries that economic growth generally benefits the elite groups and, as a result, economic inequalities grow. India’s experience is precisely the same over the period. The growing unemployment over the years is generally attributed to this basis weakness in the approach of the Government.
Types of Unemployment
Generally a person who is not gainfully employed in any productive activity is called unemployed. Unemployed is a complex phenomenon and takes forms. The important forms are:
Voluntary unemployment: In every society, there are some people who are unwilling to work at the prevailing wage rate and there are some people who get a continuous flow of income from their property or other sources and need not work. All such people are voluntarily unemployed. Voluntary employment may be a national waste of human energy, but it is not a serious economic problem.
Frictional Unemployment: Fric-tional unemployment is a temporary phenomeon. It may result when some workers are temporarily out of work while changing jobs. It may also result when the work is suspended due to strikes or lockouts. To some extent, frictional unemployment is also caused by imperfect mobility of labour. We may also say that frictional unemployment is due to difficulties in getting workers and vacancies together.
Casual unemployment: In industrial, such as building constructions, catering or agriculture, where workers are employed on a day to day basis, there are chances of casual unemployment occurring due to short-term contracts, which are terminable any time.
Seasonal unemployment: There are some industries and occupations such as agriculture, the catering trade in holiday resorts, some agro-based activities like sugar mills and rice mills, in which production activities are seasonal in nature. So they offer employment for only a certain period of time in a year. People engaged in such type of work or activities may remain unemployed during the off-season. We call it seasonal unemployment.
Structural Unemployment: Due to structural changes in the economy, structural unemployment may result. It is caused by a decline in demand for production in particular industry, and consequent disinvestment and reduction in its manpower requirement. In fact, structural unemployment is natural concomitant of economic progress and innovation in a complex industrial economy of modern times.
Technological unemployment: Due to the introduction of new machinery, improvement in methods of production, labour-saving devices, etc., some workers tend to be replaced by machines. Their unemployment is termed as technological unemployment.
Cyclical unemployment: Capitalist biased, advanced countries are subject to trade cycles. Trade cycles–especially recessionary and depressionary phases cause cyclical unemployment in these countries. During the contraction phase of a trade cycle in an economy, aggregate demand falls and this leads to disinvestment, decline in production and unemployment. The solution for cyclical unemployment lies in measures for increasing total expenditure in the economy, thereby pushing up the level of effective demand. Easy money policy and fiscal measures such as deficit financing may help. Since cyclical phase it temporary, cyclical unemployment remains only a short-term phenomenon.
Chronic unemployment: When unemployment tends to be a long-term feature of a country it is called chronic unemployment. Underdeveloped countries suffer from chronic unemployment on account of the vicious circle of poverty, lack of developed resources and their underutilization, high population growth, backward state of technology, low capital formation, etc.
Disguised unemployment: Dis-guised unemployment commonly refers to a situation of employment with surplus manpower in which some workers have zero marginal productivity so that their removal with not affect the volume of total output. Disguised unemployment in the strict sense, implies underemployment of labour. To illustrate, suppose a family farm is properly organized and four persons are working on it. If, however, two more workers are employed on it and there is no change in output, we may say theat these two workers are disguisedly unemployed. This kind of unemployment is a common feature of underdeveloped economies especially of their rural sector. In short, overcrowding in an occupation leads to disguised unemployment. It is a common phe-nomenon in an over populated country.
Nature and Extent of the problem
Most of the unemployment in India is definitely structural, that is, the structure of the economy is such that it does not absorb an increasing number of people coming to labour market in search of jobs. Apart from structural unemployment there is some cyclical unemployment which has resulted from industrial recession in urban areas. If we classify unemployment as rural and urban unemployment we find total urban unemployment is mainly of industrial unemployment and educated unemp-loyment type and rural unemployment is seasonal and diguised in nature.
Industrial unemployment is the one which has resulted from failure of the industrial sector to absorb the increasing labour force and educated unemployment results when a large number of educated people remian unabsorbed. Seasonal unemployment, generally, results in agricultural sector when a large number of small and marginal farmers and labourers do not get occupied during the off-season and disguised unemployment results when people appear to be occupied but actually they are not adding to production. This happens because of over-population which forces people to work on a small piece of land although their services on the land may not be required.
Large-scale unemployment in the economy has resulted in a number of problems like low per capita income and income inequality which themselves have led to a number of evils among which poverty is certainly the most serious one.
Poverty
It is generally agreed that only those people who fail to reach a certain minimum level of consumption standard should be regarded as poor. Differenct economists have defined poverty line in different ways. The Planning Commission has adopted the definition provided by the ‘Task force on Projections of Minimum Needs and Effective Consumption Demand’ according to which, a person is below the poverty line if his daily consumption of calories is less than 2400 in rural areas and 2100 in urban areas.
Recently the Planning Commission has changed the definition of Poverty-line. According to it, if a person living in rural area is earning less than Rs. 225 per month, he will be below the poverty line according to the revised definition of Poverty-line. It has been estimated that roughly 27 per cent of rural populaton, 24 per cent of urban population and 26 per cent of total population is still below the poverty-line in India.
Causes of Poverty
Various causes of poverty can be classified under economic, political social heads.
Economic backwardness or stagnation is often characteristic of the countryside of a developing country like India where majority of the population lives. Agriculture is the main occupation of the rural poor and contributes one-third on the NDP. Yet the income it provides to agricultural workers is substantially below average and almost at the subsistence level. This is explained by a number of factors such as small size of land holdings, inadequate irrigation facilities, lack of enough financial resources needed for investment for ensuring development and raising productivity. Thus, productivity in small farms is generally low resulting in very low levels of returns. The condition of landless agricultural labourer is worse. The economic conditions of persons engaged is non-agricultural activities in the rural sector are equally dismal.
Political vested interests are also equally responsible for widespread poverty in the economy. But whereas these interests can be countered by following the right type of policies, social factors responsible for promoting poverty are more subtle and are interwoven in the web of society itself. Inhibitings and handicaps arising from casts and religion are hard to overcome and require considerable effort by way of propaganda and education through mass media, reorientation of education system and so on.
Apart from these, other factors such as family size and family composition, poor levels of education and skills, lack of motivation and will to get out of the rut of poverty and misery, the feudalistic system of bonded labour in some parts of the country and so on, are also responsible for depressed standards of living among people.
Government Policy
Poverty alleviation and raising the average standard of living have always been stated as the central aims of economic planning in India. The plan strategies to acheive these aims can be broadly divided into three phases. In the first phase, the prime emphasis was on growth. The expectation was that growth through improvement in infrastructure and heavy industries will take care of the question of equity and self reliance. In the second phase, beginning with Fifth Plan, poverty alleviation came to be adopted as an ‘explicit objective’ of economic planning. Several specific programmes for poverty alleviation and employment generation directed towards selected target groups were launched. In the third and final (present) phase, is was realised that a strategy based on growth or one on equity and poverty alleviation could not be made effective in isolation. Therefore, emphasis shifted to ‘growth’ and ‘poverty alleviation’ as two complementary actions.
A Review of programmes
Integrated Rural Development Programme (IRDP): The IRDP started since the Sixth plan, aims at an all round development of the ‘target group’ to lift it above the poverty line. The target group consists of the poorest among the poor in rural areas. Under the programme, subsidies are provided to the identified families so as to enable them the acquire an income generating asset. It, though a programme of asset endowment, aims to provide self-employment in a variety of activites like sericulture, animal husbandry weaving and handicrafts, etc. The progress of the IRDP, however, has been slow, primarily because of various administrative difficulties in implementation.
Scheme for providing self-employment to educated unemployed youth: This scheme aims at providing self-employment to about 2 to 2.5 lakh educated unemployed youth through industry, service and business routes in each year. The scheme provides a loan upto Rs. 25,000 at concessional rate of interest of 10 per annum in the centrally backward districts and 12 per cent per annum in other districts.
Self employment programme for urban poor (SEPUP): The SEPUP envisages providing self-employment to urban poor living in urban and suburban areas, through the provision of subsidy and bank credit. A unique feature of the scheme is its approach of making the banker solely responsible for its implementation, right from identification to recovery. Though this can be an ideal scheme for improving the living standards of urban poor it has certain limitations like lack of experience on the part of the urban banker as well as the urban poor, non-availability of organised marketing, tough competition in urban areas, tendency to spend additional income on luxuries and spiralling of prices of essential commodities, which necessitate taking of urgent measures.
Jawahar Rozgar Yojana (JRY): The JRY had been formulated by merging together two wage employmet programmes that had been in operation earlier, vis., NREP and RLEGP. The major objectives of the JRY are—generation of additional gainful employment for the unemployed and underemployed in rural areas; (2) creation of productive commuity assets for the benefit of priority groups; and improvement in the overall quality of life in the rural areas. This programme is renamed now as Jawahar Gram Samridhi Yojana.
Nehru Rozgar Yojana (NRY): The NRY is the urban counterpart of the JRY. It aims at creating one million jobs annually. It will create opportunities for self-employment as well as generate wage employment. The target group will be the urban poor living below the poverty line. This programme was later merged with Swarn Jayanti Shahari Rozagar Yojana.
Programme of Development of Women and Children in Rural Areas (DWCRA): The DWCRA aims to improve the socio-economic status of the poor women in rural areas through creation of group of women for income generating activities on a self-sustaining basis.
Employment Assurance Scheme (EAS): The EAS has been universalised so as to make it applicable to all the rural blocks of the country. It aims at providing 100 days of unskilled manual work up to two members of a family in the age group 18-60 years normally residing in villages in the lean agriculture season.
Swarna Jayanti Shahari Rozgar Yojana (SJSRY): The SJSRY which came into operation from December’ 97, sub-summing the earlier urban poverty alleviation programmes viz, Nehru Rozgar Yojana (NRY,) Urban basic Services Programmes (UBSP) and Prime Minister’s Integrated Urban Poverty Eradication Programme (PMIUPEP). The scheme aims to provide gainful employment to the urban unemployed or underemployed poor by encouraging the setting up of self-employment ventures or provision of wage employment.
Prime Minister’s Rozgar Yojana (PMRY): PMRY for providing, self-employment to educated unemployed youth had been designated to provide employment to more than a million persons by setting up of 7 lakh micro enterprises in Eighth Plan. The scheme is being continued in the Ninth Plan.
Swarna Jayanti Gram Swarozgar Yojana (SGSY): Introduced in April, 1999 as a result of restructuring and combining the Integrated Rural Development Programme (IRDP) and allied programmes along with Million Wells Scheme (MWS) into a single self-employment programme, it aims at promoting micro enterprises and helping the rural poor into self help groups.
1 National Social Assistance Programme (NSAP): This programme was launched in 1995 to provide social assistance benefit to poor households affected by old age, death of primary bread winner or need for maternity care.
2 Pradhan Manti Gramodaya Yojana (PMGY): Introduced in 2000-01, focussing on village level development in five critical areas: health, primary education, drinking water, housing and rural roads with the objective of improving the quality of life of people in the rural areas.
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