Jobless Economic Growth

In the not so distant past, India was the world’s fastest growing economy with GDP growth rate of about 7.5%. But various reports have shown that there is decline over the aggregate numbers of jobs created over the past few years. As many as 5 million jobs were lost between 2004–05 and 2009–10, paradoxically during the time when India witnessed the highest and consistent 8% growth in its economy. On one hand, about 13 million youths were entering the labour force every year and on the other hand, the gap for employment and growth only widened.

Reasons for Jobless Growth:

• Information technology and service sector driven economy, (~60% contribution to GDP) which is not labour intensive in nature.
• Stringent labour laws prevent firms/factories from getting bigger and employ large numbers of people.
• Poor infrastructure, lack of capital and energy issues are hindering the development of the manufacturing industry, which is very important to create new jobs and employment.
• Ease of doing business, environmental clearance, credit availability and poor business environment for MSMEs which can drive low-cost high employment industries.
• Decline in exports and increasing import competitiveness in labour intensive sectors like textiles, jems and jewellery with countries like Vietnam, China, etc.
• Poor quality of education and lack of proper skills and training, which make them unemployable.
• Protests and social movements against large-scale projects like POSCO, TATA motors.

Although, Indian economy is passing through a phase of ‘jobless growth’, but in recent times government has initiated various reform projects like-Make in India, Digital India, Skill India, Mudra Yojana, increasing upper limit for FDI, Start-up India, etc, which will show results in coming future. This will help in harnessing the benefit of India’s demographic dividend by generating quality, skilled manpower and adequate opportunities of employment generations. Increasing public sector investment, subsidies and incentives for MSMEs, training and entrepreneurship development are some steps which will increase job growth.