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High Youth Unemployment in India

GS Paper 3

 Syllabus: Unemployment

 Source: IE

 Context: Despite being the fastest-growing large economy, India faces the challenge of high youth unemployment alongside economic growth.

What is unemployment?

Unemployment is a situation when a person actively searches for a job and is unable to find work. Unemployment indicates the health of the economy.

 

According to the latest annual Periodic Labour Force Survey (PLFS), released by the National Statistical Office (NSO), India’s unemployment rate in July 2021-22 to 4.1%

 

Reason for High Unemployment in India Despite High Economic Growth: 

  • Lop-Sided Development Policies: India’s growth and unemployment coexist due to imbalanced policies that create fewer jobs for new labour force entrants.
  • Demographic Composition: Over 50% of India’s population is below 25, and over 65% is below 35. Despite high growth, job creation hasn’t kept pace with this demographic.
  • Less Focus on Human Infrastructure: India’s progress in physical infrastructure hasn’t been matched in education and skills. The absence of strong human infrastructure limits job growth.
  • Shift to Rural Manufacturing: Urban-centric physical infrastructure investments conflict with manufacturing’s move to rural areas for cost competitiveness.
  • Constrained Growth in Rural Areas: Poor physical and human infrastructure in rural areas hinders growth drivers and limits the size of the manufacturing sector.

 

What is Human Infrastructure?

Human infrastructure refers to the development and investment in the education, skills, and capabilities of a population. It encompasses efforts to improve literacy, vocational training, healthcare, and other factors that enhance the human capital and productivity of a society.

 

Importance of Investing in Human Infrastructure:

  • High Returns: Education investment yields higher returns than physical investment. Social returns for primary education are around 20%, and returns for higher education are increasing.
  • Job Creation Acceleration: Education investments accelerate job creation. New enterprises, both domestic and foreign, seek skilled workers and strong physical infrastructure.
  • Youth Advantage: India’s sizable youth population can significantly benefit from education, aligning with the needs of new enterprises.

 

Recommendations:

  • Address Lop-Sided Development Policies
  • Improve Rural Human Infrastructure
  • Scale Up Tertiary Education
  • Promote Tier II Cities: The focus of economic growth should shift to Tier II cities, where new job opportunities and GDP growth can be generated.
  • Address Urbanization and De-Industrialization Divergence: Policymakers need to consider rural structural transformation that includes not only agricultural productivity but also the manufacturing sector.
  • Integrate Human and Physical Infrastructure: To overcome the limitations of poor physical and human infrastructure in rural areas, a comprehensive approach that aligns both aspects is necessary for sustainable job growth.

 

Conclusion:

The challenges posed by the coexistence of high economic growth and high unemployment can be overcome by scaling up investments in both physical and human infrastructure, bridging the gap between urban and rural areas in India.

 

Insta Links:

Unemployment has decreased, says Labour Survey

 

Mains Links:

How globalization has led to the reduction of employment in the formal sector of the Indian economy? Is increased informalization detrimental to the development of the country? (UPSC 2016)