Business Cycles (II)

8/14/2019 Business Cycles (II)

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Nature and Trends of

Unemployment inIndia

Pyare Lal Verma, Faculty Eco/QM

PREPARED BY:

Macroeconomics &

Business Environment

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Session18

1 To understand about the nature and Trends of Unemployment in India.

3 To provide an estimate of unemployment in India.

To understand about the nature of urban unemployment in India.

Issues associated with implementation of employment programs in India


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Session18 Nature of Unemployment in India

a) Nature of unemployment in India isi. Structural

ii. Disguised

b) Cause of unemployment: inadequacy of productive

capacity to create adequate jobsc) Cyclical unemployment (Keynesian involuntary

unemployment) is also on increase since last two

decades

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Session18 Classification of unemployment in India

a) Urban Unemploymenti. Industrial unemployment

ii. Educated unemployment

b) Rural Unemployment

i. Open unemploymentii. Disguised unemployment

iii. Seasonal unemployment

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Session18 Estimates of unemployment in India

a) Planning Commission since 1951 provides estimates on

unemployment.

c) Raj Krishna calculate first ever most reliable estimate of

unemployment rates from data provided by NSS.

e) NSSO developed and standardized the concepts and definitions

of labor force, employment and unemployment suitable to Indian

condition.

g) Since 1972-73 these concepts are adopted by NSSO andPlanning Commission.

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Session18 Unemployment Measurement in India

The three concepts of unemployment developed by NSSO are:

b)Usual Status : determine usual activity status & indicate chronic

unemployment as usually unemployment in the reference year are

counted as unemployed.

d)Weekly Status : Determine activity status of a person in precedingseven days. Any person worked for an hour or more during that

period is employed.

f)Daily Status : it considers the activity status of a person for each

day of the preceding seven days of reference period. It is ratio oflabor days per week reported as unemployed to the total labor force

days per week.

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Session18 Unemployment Measurement in India

a) Daily status concept provides the most appropriatemeasure of unemployment as it cover open as well as

partial unemployment

c) Weekly status is rough measure of proportion ofpeople remained unemployed for a whole week.

e) Usual status is the rough estimate of the chronic

unemployment rate.

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Session18 Estimates of Unemployment during eighties

Status 1972-73 1977-78 1983 1987-88Usual Principal Status - 4.23 2.77 3.77

Usual Principal & Subsidiary

Status

1.61 2.47 1.90 2.62

Weekly Status 4.32 4.48 4.51 4.80

Daily Status 8.35 8.18 8.28 6.09

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a) A shift from the state of unemployment towards greater open

unemployment

b) There are large differences in the unemployment rates among different

states.

c) In April 1992 the number of people seeking full time new employment

opportunity stands at 23 million.


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Session18 Employment Guarantee Programs

a) Most of unemployment in urban areas are Open &Undisguised

b) Government of India take up various employment

guarantee programs like:

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Program Objective

Rural Works Program (1970-71) Construct permanent civil works

Crash Scheme for rural employment

(1972)Projects of durable nature

DPAP (1973)

Command Area Development Program(1974-75)

Hill Area Development Program (1974)

Desert Development Program (1977-78)

Area Development Program


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Session18 Employment Guarantee Program

Program Objective

Food for Work Program (FFWP) 1977Create durable community assets

and social infrastructure

Training for Rural Youth in Self

Employment (TRYSEM) 1979

Provide technical skill to 18 to 35

years youths

National Rural Employment Program(NREP) 1980 Restructured and renamed FWP totackle seasonal unemployment

Integrated Rural Development Program

(1976-80)

Provide self employment and raise

level of income

Development of Women and Children in

Rural Areas (DWCRA) 1982-83Supportive program for IRDP

Rural Landless Employment Guarantee

Program (RLEGP) 1983

Program to supplement NREP, 100day employment to one member of

landless family

Self Employment Scheme for Educated

Unemployed youth (SEEUY) 1983-8418-35 year old

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Session18 Employment Guarantee Program

Program Objective

Self Employment Program for Urban Poor

(SEPUP) 1986-87Families coming under BPL

Jawahar Rojgar Yojana (JRY) 1989 Merging NREP and RLEGP

Nehru Rojgar Yojana (RRY, 1989) with

three components a) The scheme forUrban Micro Enterprise; b) The scheme

for Urban Wage Employment; c) The

scheme for Housing and Shelter

Upgradation

JRY for rural areas and NRY for

urban areas

National Rural Employment Guarantee

Act (NREGA)

To reduce migration of rural poor

households in the lean period byproviding 100 days of guaranteed

unskilled manual labor at minimum

wage. Works include a) water

conservation; b) land development;

c) drought proofing

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Session18 Implementation of Employment Program

a) Lack of resource to finance these programs

c) Choice of appropriate work to be done

e) Lack of clarity regarding organization of these programs

g) According to Ragner Nurkse, LDCs cannot raise adequate

resources for capital projects from taxes and domestic saving,

they therefore shall import foreign capital

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Session18

THANK YOU

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Business Cycles (II)