Why is jobless growth continuing in India since LPG reforms? Explain
Ans: The new model of
economic reforms is usually known as the LPG or Liberalization, Privatization
and Globalization. India got freedom in 1947 but its economy was in shambles.
To develop that tattered economy, LPG model was followed. At that time economic
growth was not too good due to lack of proper resources, poor financial and
the country’s GDP growth, employment growth and elasticity of employment
indicates that the GDP growth has steadily increased from 4.5 per cent during
1970 to 9 per cent during 2005 and 2012 periods but the elasticity of
employment with respect to GDP declined for the primary sector. However, it is
declining in manufacturing and tertiary sectors also.
This shows the
paradox of growth that does not create employment, a phenomenon called `jobless
growth.’ Economists explain that the
growth is credited not because of creation of new employment opportunities as the
result from development, but due to accumulation of wealth and increase in
wages. Growth has two features: It increases the availability of cash in hand
or increase in demand requiring new activities to meet the supply leading to an
increase in employment.
It is important
to note that India’s pattern of growth has been atypical and has not followed
the standard path i.e., the phases of development process or the structural
transformation did not go hand in hand from primary sector to manufacturing and
then to tertiary, one driving the other. In India, it appears that that the
second (manufacturing sector) stage of development process has been bypassed
and has entered into the third (tertiary) stage directly from the first
The growth is
attributed to service sector, whereby both employment and wages have seen a
rise. But as figures say, the biggest employing sector in the country is
agriculture sector employing more than 45 per cent of the population but
contributing 15 per cent of the GDP, whereas service sector is the biggest
contributor to the GDP but employs less than 30 per cent. Manufacturing
contributes 16 per cent to the GDP and employs around 13 per cent.
attributed to the jobless growth are failure in adopting labour intensive
manufacturing techniques, stagnation in manufacturing output and employment and
contraction of labour intensive segment of the formal manufacturing sector,
slow infrastructure development and other impediments.
failure of economic reforms has been its inability to provide good jobs in the
formal sector. In fact, employment for men in the organised sector, decent jobs
that pay regular wages with benefits such as PF shrank in the 15 years between
1997 and 2012. But there is some silver lining–jobs for women in the organised
sector has gone up after liberalisation.
The Takshasila IAS Academy conducted a number of seminars on the jobless growth and the academy MD BSN Durga Prasad invited distinguished guests who analysed the paradox with their acumen that greatly benefited the civil service aspirants.