Mentor’s Comment:

Introduction should explain about jobless growth supplemented with some examples like NSSO survey etc.

Further main body will discuss about the policies of Pre-liberalized era which kept decreasing jobs and ultimately resulting into jobless growth. Points like, Focus on higher education, labour laws, import oriented economy, closed market etc…

Next mention about Steps needed to reverse the Phenomenon of Jobless Growth like jobs in manufacturing sectors, private corporates, entrepreneurship, infrastructure development, urbanization etc… apart from modification in laws such as labour laws, FDI, ease of doing business etc will play significant role.

Conclude with positive note showing the positive effects of LPG and what more required in 2-3 sentences.

 

Model Answer:

Jobless growth is a phenomenon in which an economy is growing considerably in absolute terms , however a major portion of the people in the economy are jobless. NSSO job data clearly indicates that employment elasticity of Growth has shown considerable decline in last 2 decades. Thus even when India has grown close to 8% growth in last 2 decades, We have not created enough jobs for our Working population.

How policies of the Pre-Liberalization era are responsible for Jobless growth?

India’s focus on higher education: Indian Government since second five year plan focussed more on higher education rather than basic education (Unlike South east Asia). In order to create mass scale manufacturing jobs, the workforce should have some basic skills however in India because the focus was on higher education, we failed to create enough basic skilled workforce required for labour intensive manufacturing. When India adopted economic reforms in 1991, We had a pool of highly educated workforce but we had shortage of labour force with basic skills, This meant that India’s growth story of last 2 decades was led by few sectors in Service sector like IT, Banking, telecommunication etc because these sectors required highly educated workers which we had plenty. However these sectors are not labour intensive.  While the share of Service sector increased significantly in India’s GDP ,however the share of services in the employment structure remained more or less stagnant.

India’s labour laws: India’s rigid and often confusing labour laws enforced by a myriad agencies have done irreparable damage to the cause of labour. Our labour laws discourages entrepreneurs to employ more workers because then they have to comply with more stringent laws,waste of time and money. They were enacted in 1970’s ,however they were not reformed in the post liberalization era because of lack of political consensus.

Import-oriented economy:

India did not move from the import substituting phases of its economic development to an export-oriented development strategy and hence failed to witness a strong growth in the labour-intensive segment of the manufacturing sector. If India would have followed Labour intensive goods export led model like South east Asian countries, it would have created many jobs in the msme sector.

Opening up of the economy lead to the availability of cheap capital goods from abroad.

Steps needed to reverse the Phenomenon of Jobless Growth

1. The service sector has a limitation in providing the jobs our country needs now.The way out for this is the jobs from manufacturing sector.
2. For creating jobs private investment needs to be boosted which is coming down over the years.
3. The banks need to resolve the issue of NPA’s to lend for investments ,thereby promoting growth and job creation.
4. Urbanization is a process that can bring in lot of jobs by construction and services to the people moving from rural to urban areas.
5. The stringent labour laws need to be reformed to encourage entrepreneurship which can create jobs.
6. Emphasis should be given for development of micro,small and medium enterprises which has potential of job creation more than big firms,especially in the backdrop of lack of education.