Libertatem Magazine

Unemployment in India

Contents of this Page

The unemployment rate in India rose to 7.2 percent in February 2019, the highest since September 2016, and also up from 5.9 percent in February 2018, according to the latest data compiled by the Centre for Monitoring Indian Economy (CMIE).

In India, unemployment is largely due to the low percentage of literacy rate. But in recent years through India’s literacy rate has increased distinctively the problem of unemployment persists and has a very long way to success.

Unemployment occurs when a person who is actively searching for employment is unable to find work. Unemployment is used as a measure of the health of the economy. The measure of unemployment is the unemployment rate, which is the number of unemployed people divided by the number of people in the labour force.

Measurement of Unemployment

We may call a person unemployed or underemployed if either:

  • He is gainfully occupied during the year for several hours(or days) less than some normal or optimal hours (or days) defined as full employment hours or days;(The Time Criterion) or
  • He earns an income per year less than some desirable minimum; (The Income Criterion) or
  • He is willing to do more work than he is doing at present – he may either be actively searching for more work or be available for more work if it is offered on terms to which he is accustomed; (The Willingness Criterion) or
  • He is removable from his present employment in the sense that his contribution to output is less than some normal productivity and therefore his removal would not reduce output if the productivity of the remaining workers is normalized with minor changes in technique and/or organization. (The Productivity Criterion)

National Sample Survey Office (NSSO), an organization under the Ministry of Statistics and Programme Implementation (MoSPI) measure unemployment in India on following approaches:

  • Usual Status Approach: This approach estimates only those persons as unemployed who had no gainful work for a major time during the 365 days preceding the date of the survey.
  • Weekly Status Approach: This approach records only those persons as unemployed who did not have gainful work even for an hour on any day of the week preceding the date of the survey.
  • Daily Status Approach: Under this approach, the unemployment status of a person is measured for each day in a reference week. A person having no gainful work even for 1 hour in a day is described as unemployed for that day.

Causes Of Unemployment

  • Low literacy rate and poor education level.
  • Prevailing of the reservation system.
  • The majority of people in the informal sector are due to a lack of required education/ skills, which is not captured in any employment data. The syllabus taught in schools and colleges, being not as per the current requirements of the industries. This is the main cause of structural unemployment.
  • Inadequate growth of infrastructure and low investments in the manufacturing sector.
  • The low productivity in agriculture sector combined with lack of alternative opportunities for agricultural worker which makes the transition from primary to secondary and tertiary sectors difficult.
  • Regressive social norms discourage women from taking/continuing employment.
  • Inadequate state support, legal complexities, and low infrastructural, financial, and market linkages to small/ cottage industries or small businesses, making such enterprises unviable with cost and compliance overruns.
  • Due to the caste system, work is prohibited for specific castes in some areas.
  • The constant increase in population has been a major cause of unemployment.

Government Initiatives to Control Unemployment in India

  • Integrated Rural Development Programme (IRDP) was launched in 1980 to create full employment opportunities in rural areas.
  • Training of Rural Youth for Self-Employment (TRYSEM): This scheme was started in 1979 to help unemployed rural youth between the age of 18 and 35 years to acquire skills for self-employment. Priority was given to SC/ST Youth and Women.
  • RSETI/RUDSETI: To mitigate the unemployment problem among the youth, a new initiative was tried jointly by Sri Dharmasthala Manjunatheshwara Educational Trust, Syndicate Bank, and Canara Bank in 1982 which was the setting up of the “Rural Development And Self Employment Training Institute” with its acronym RUDSETI near Dharmasthala in Karnataka. Rural Self Employment Training Institutes/ RSETIs are now managed by Banks with active co-operation from the Government of India and State Government.
  • By merging the two erstwhile wage employment programme – National Rural Employment Programme (NREP) and Rural Landless Employment Guarantee Programme (RLEGP) the Jawahar Rozgar Yojana (JRY) was started with effect from April 1, 1989, on an 80:20 cost-sharing basis between the centre and the States.
  • Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA): It is an employment scheme that was launched in 2005 to provide social security by guaranteeing a minimum of 100 days of paid work per year to all the families whose adult members opt for unskilled labor-intensive work. This act provides the Right to Work to people.
  • Pradhan Mantri Kaushal Vikas Yojana (PMKVY), launched in 2015 has the objective of enabling a large number of Indian youth to take up industry-relevant skill training that will help them in securing a better livelihood.
  • Startup India Scheme, launched in 2016 aims at developing an ecosystem that promotes and nurtures entrepreneurship across the country.
  • Stand Up India Scheme, launched in 2016 aims to facilitate bank loans between Rs 10 lakh and Rs. 1 crore to at least one SC or ST borrower and at least one women borrower per bank branch for setting up a Greenfield enterprise.


If we see in India the two main reasons for the high rate of unemployment is the defective education system and the high growth of population where the former indirectly depends on the latter. So the main reason left behind is the proper education. There should be effective implementation of government initiatives that are being taken to reduce unemployment. To create more government jobs there should be public investment in sectors like health, education etc. 

About the Author