NITI Ayog’s 3 Year Action Agenda (2017-2020)

♤ Job creation in Industry and Services

♤ Create Coastal Employment Zones to boost exports and generate high-productivity jobs.

♤ Enhance labour-market flexibility through reforming key laws

♤ Address the high and rising share of Non-Performing Assets (NPAs) in India’s banks through supporting the auction of larger assets to private asset reconstruction companies (ARCs), and strengthening the State Bank of India-led ARC.

♤ Action points for specific sectors- Apparel, Leather and footwear, Electronics, Food processing, Gems and jewelry, Tourism, Finance, Real estate.

2.7. Reasons for Unemployment

India has comparative advantage in terms of cheaper and more abundant labour. But this is nullified by other factors that render them less competitive than their peers in competitor countries.

♤ Defective education system - Failing education system that creates thousands of ‘unemployable graduates’. National Employability Report for Engineers (Aspiring MInds) reveals that over 80 per cent of Indian engineers are unemployable

♤ Slow economic growth - Inadequate job creation (therefore non-farm sector (such as manufacturing) needs to be encouraged as farm land is limited)

♤ Lack of infrastructural development- India is behind its competitors when it comes to infrastructure such road and logistics. The costs and time involved in getting goods from factory to destination are greater than those for other countries.

♤ Poor ranking in Global Competitiveness Index-reflected in the high average tariff that India is maintaining on its imports, low level of factor accumulation, and relatively high incremental capital-output ratio. India has slipped 10 ranks in the latest Global Competitive Index.

♤ Rapid population growth - Skilling and job creation is hard to catch up with a rapid growing population especially when the population base is large and the institutions and policies are not effective in creating quality jobs.

♤ Inadequate employment planning by government in comparison to the population growth.

♤ Lack of entrepreneurship culture- India needs to develop a culture of job-providers than being a job-seeker among its youth.

2.8. Consequences of Unemployment

♤ Unrest in population – especially the youth- The Jaat reservation stir in Haryana is a visible manifestation of violent form of the problem of unemployment. Similarly other locally dominant caste and communities like Patels in Gujarat, Kapu community in Andhra Pradesh, Gujjar in Rajasthan are also demanding reservation in employment.

♤ Low economic growth – The human capital of a nation is not fully utilized if the unemployment rate is high. It turns the people who are an asset into a liability. Increase in unemployment is an indicator of a depressed economy.

♤ Vicious cycles of Poverty – Unemployment and poverty feed are the two sides of the same coin with one leading to the other. It also reduces demand which in turn affect other sectors of the economy.

♤ Lower social indicators & burden on government – Unemployment leads to reduced spending on health and education by people. This affects social indicators of the population.

♤ Source of exploitation - People cannot remain completely unemployed for very long because of their desperate economic condition. Thus, they are forced to accept jobs that may be unpleasant or exploitative.

♤ Loss of labour efficiency – When a person is out of work for long, his/her efficiency decreases as a result of loss of skills and work habits.

♤ Adverse effects on savings – As the employed person have to take care of the unemployed ones in the family, their capacity to save falls.

♤ Leads to inequalities of income – Unemployment pushes people to poverty. During the period of mass unemployment, the extent of poverty and inequality of income tends to increase.

2.9. Steps Taken by the Government to Tackle Unemployment

India is midway through its demographic dividend – a period of time when demography gives economic growth a boost by expanding the working-age share of the population. To exploit the dividend and meeting the aspirations of people entering the labour force, India’s economy needs to create enough “good jobs”. Many steps have been taken for increasing employment in recent times.

♤ National Rural LIvelihood Mission: Two initiatives for skill development are undertaken under this scheme:

○ Pandit Deen Dayal Upadhyaya Grameen Kaushalya Yojana: It is a placement linked skill development program which allows skilling in a PPP mode and assured placements in regular jobs in an organization not owned by the skilled person.

○ Rural Self Employment and Training Institutes (RSETI): It enables the trainee to take Bank credit and start his/her own Micro-enterprise

♤ Make in India: It aims at promoting India as an important investment destination and a global hub for manufacturing, design and innovation.

♤ Startup India Programme: It aims to build a strong eco-system for nurturing innovation and startups in the country which will drive economic growth and generate large scale employment opportunities.

♤ Mudra Scheme: It provides access to institutional finance to unfunded micro / small business units by extending loans upto Rs.10 lakh for manufacturing, processing, trading, services and activities allied to agriculture, which help in creating income generating activities and employment.

♤ Stand Up India: It provides access to institutional finance to unfunded micro / small business units by extending loans upto Rs.10 lakh for manufacturing, processing, trading,

services and activities allied to agriculture, which help in creating income generating activities and employment.

♤ National Manufacturing Policy to engage in job creation numbering 10 crore work opportunities by 2022.

♤ National Urban Livelihoods Mission: It focuses on organizing urban poor in self help groups, creating opportunities for skill development leading to market-based employment and helping them to set up self-employment ventures by ensuring easy access to credit.