The Problem of Unemployment in India

In 2019, India became the youngest country in the world, with a median age of 29 years. This is significant because the average age in most developed countries is nearing the late 40s. This means India has a large workforce, which can be a great asset. 

Every year, more than 1.2 crore people enter the workforce, creating an opportunity for economic growth. However, the reality is different. India has been struggling with unemployment for decades because job creation has not kept pace with the growing workforce. (because enough jobs are not being created to match the number of people who need them.)

Unemployment is defined as a situation where a person is physically and mentally capable of working at the existing wage rate but still cannot find a job.

Types of Unemployment in India

Disguised Unemployment: This occurs when more people are employed than needed (necessary one). Removing some workers does not affect production. More people work in a job than necessary. (Even if some workers leave, production remains unaffected.). This is common in agriculture.

Seasonal Unemployment: This happens during specific seasons of the year. For example, workers in industries like holiday resorts or ice factories may remain unemployed during the (in) off-season.

Cyclical Unemployment: Caused by economic cycles, unemployment increases during economic downturns. However, this type of unemployment is rare in India.

Frictional Unemployment: People remain jobless for short periods while switching jobs or entering the workforce  for the first time.

Structural Unemployment: This arises due to a mismatch between available jobs and the skills of workers. When workers’ skills do not match available jobs due to economic changes, it leads to structural unemployment.

Status of Unemployment in India

According to the seventh Annual Report of the Periodic Labour Force Survey (PLFS) conducted by the National Sample Survey Office (NSSO) from July 2023 to June 2024, the unemployment rate for men in rural areas was 2.7%, compared to 4.4% in urban areas. For women, the unemployment rate was 2.1% in rural areas and 7.1% in urban areas.

These figures are slightly lower than in 2022-2023. Meanwhile, the International Labour Organization (ILO) report, World Employment and Social Outlook: Trends 2025, predicts a rise in global unemployment.

Causes of Unemployment in India

Several factors contribute to high unemployment in India:

Growing Population: India’s population has crossed 1.42 billion, making it the most populous country in the world. A rising population increases competition for limited jobs.

Flawed Education System: The education system focuses on degrees rather than skills, making graduates unfit for the job market.

(The current education system is not job-oriented but degree-oriented. It focuses on classroom learning rather than practical skills, leaving many graduates unprepared for the job market.)

Decline of Cottage Industries: Industrialization has led to the downfall (decline) of small-scale industries, especially in villages, increasing rural unemployment. (, reducing employment opportunities in rural areas.)

Low Wages and Part-Time Work (Limited Job Opportunities): Industries provide full-time jobs to only a small number of people, often at low wages. Many industries offer only part-time work or pay wages below the acceptable rate, further exacerbating unemployment.

Effects of Unemployment

Unemployment negatively (severely) impacts India’s economy and society:

Exploitation of Labor: Due to job scarcity, unemployed workers are often forced to accept low wages and poor working conditions..

Social Issues:Unemployment leads to social evils like crime, gambling, dishonesty, and immorality, disrupting law and order.

Poverty: Without jobs, people have no income, so unemployed individuals fall into poverty, increasing debt and economic problems (financial burdens).

Wastage of Human Resources: Unemployment wastes human potential. Skilled workers remain unproductive, slowing economic growth.

Government Burden: Unemployment reduces production and consumption, forcing the government to borrow more money from other countries to support the economy.

Government Initiatives to Reduce Unemployment

The Indian government has launched several programs to address unemployment:

1. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2006

Provides 100 days of guaranteed wage employment per year to rural households willing to do unskilled manual work.

2. Aajeevika – National Rural Livelihoods Mission (NRLM), 2011 

Encourages self-employment by forming Self-Help Groups (SHGs) to empower rural people. (Aims to reduce poverty by organizing rural poor into Self-Help Groups (SHGs) and promoting self-employment.)

3. Deendayal Antyodaya Yojana – National Urban Livelihood Mission (DAY-NULM), 2013

Focuses on reducing urban poverty by providing self-employment and skilled wage employment opportunities to urban poor. This mission would also address livelihood concerns of the urban street vendors by facilitating access to suitable spaces, social security and skills. (, including support for street vendors.) (,including loans for street vendors.)

4. Pradhan Mantri Mudra Yojana (PMMY), 2015

Offers collateral-free loans for small businesses. (for entrepreneurship development in non-farming activities.)

Shishu: Up to ₹50,000

Kishor: ₹50,000 to ₹5 lakh

Tarun: ₹5 lakh to ₹10 lakh

5. National Career Service (NCS), 2015

Connects job seekers with employers and provides career counseling and training. Bridges the gap between job seekers and employers, providing career guidance and training.

6. Pradhan Mantri Kaushal Vikas Yojana (PMKVY), 2015

Offers skill training to unemployed youth, especially school dropouts. Provides skill training to 1.4 million youth, focusing on school dropouts and new entrants to the labor market.

7. Startup India and Standup India, 2016

encourages entrepreneurship (Supports startups) by providing funding, incentives, mentorship, tax benefits, and support to startups. Standup India specifically targets Scheduled Castes (SCs), Scheduled Tribes (STs), and women entrepreneurs and provides loans from ₹10 lakh to ₹1 crore to women and SC/ST entrepreneurs.

8. Skill India Mission

Aims to enhance the skills of (train) Indian workers, making them employable  in different industries and improving productivity.

Conclusion

The full utilization of human resources is essential for a country’s growth. 

A country’s economic growth depends on utilizing its human resources effectively.  

In India, unemployment is a structural issue that hinders inclusive development. Factors like lack of industrial reform, poverty, and overpopulation have worsened the problem. 

While the government has launched several employment generation schemes, there is a need to focus on equipping the youth with industry-relevant skills, education, and training. 

(In India, unemployment is a major challenge caused by structural issues, population growth, and a lack of industrial reforms.  The government must focus on job creation, skill development, and industry-oriented education. By investing in human resources, India can ensure sustainable economic growth where everyone benefits from development.)

Investing in human resources will pave the way for a prosperous India where the benefits of development are shared equally among all.