Issues in Indian Economy

UNIT 8 UNEMPLOYMENT IN INDIA

Structure
Objectives
8.1 Introduction
8.2 Types of Unemployment
8.3 Nature and Extent of Unemployment in India
8.4 Causes of Unemployment
8.5 Consequences of Unemployment
8.6 Policy Initiatives for Employment Generation in India
8.7 Let Us Sum Up
8.8 Key Words
8.9 Terminal Questions

8.0 OBJECTIVES
After going through this unit, you will be able to:
● Explain the concept of unemployment;
● Describe the types of unemployment;
● Discuss the causes and consequences of unemployment in India;
● Suggest remedial measures for unemployment; and
● Highlight the policy measures for employment generation and labour reforms.

8.1 INTRODUCTION
Unemployment is a situation where a person is willing to work at the ongoing
wage rate, but does not find work. In other words, if a person is able to work
and willing to work, but does not get work at the prevailing wage rate, he is
considered as unemployed.
Classical economists held that there is always full employment in the economy.
Their viewpoint however was proved wrong during the ‘Great Depression’ of
1929-33. Famous economist J M Keynes explained the concept of depression and
associated it with unemployment in his book “The General Theory of Employment
Interest and Money”, which was published in 1936. Keynes also suggested
remedial measures for controlling depression as well as unemployment. Hence
the problem of unemployment gained importance only after the Great Depression.
Unemployment is one of the major problems in India. Unemployment is not only
a social stigma for a person; it leads to wastage of human resources, poverty,
inequality and ill-health. The nature of unemployment in India is different from
that in the developed countries. In developing countries unemployment exists
mainly due to the lack of capital. Capital deficiency does not permit various
economic sectors to expand and generate jobs. In this Unit, will learner the
nature, extant, causes and conseqmences of unemployment the policy initiatives
for employment generation has been further eleborated.

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 Unemployment in India
8.2 TYPES OF UNEMPLOYMENT
It is relevant to distinguish between two concepts: ‘voluntary unemployment’
and ‘involuntary unemployment’. If a person does not want to work or wants
wage which is higher than the current market rate, he will be called ‘voluntarily
unemployed’. Such unemployment is not an economist’s concern and nothing can
be done about it. The other type of unemployment is ‘involuntary unemployment’;
the person is willing to work, but cannot find work at existing wage rate. In
economics, unemployment means involuntary unemployment alone.
Apart from the two types of unemployment mentioned above (voluntary
unemployment and involuntary unemployment), there are some other forms of
unemployment.
(i) Cyclical Unemployment: Cyclical unemployment is caused by business
cycles and hence it is called cyclical unemployment. During the depression
phase of the business cycle, effective demand falls leading to accumulation
of inventories. Consequently, large scale retrenchment takes place and
unemployment is there. It is called deflationary unemployment also.
However, this sort of unemployment automatically disappears once the
depression phase of business cycle ends and economic recovery starts.
(ii) Frictional Unemployment: Frictional unemployment exists when job
opportunities are enough but labour is unemployed. This happens due to
frictions in the economy. There could be lack of information about job
availability, immobility of workers from one place to another, lack of desired
skill on the part of unemployed workers. There could be shortage of raw
materials, breakdown of machinery and power crisis due to which there
is under-utilization of production capacity. This type of unemployment is
temporary in nature.
(iii) Seasonal Unemployment: Seasonal unemployment, as the name suggests, is
a seasonal phenomenon. It is associated with activities carried out in certain
seasons only. Such unemployment is very common in agriculture; there is
a lean season after harvest. It can also be found in seasonal industries like
ice making, sugarcane crushing, etc.
(iv) Structural Unemployment: Structural unemployment is caused by certain
bottlenecks in the very structure of the economy. These bottlenecks could be
lack the capital, backward socio-economic framework, too much dependency
on agriculture, and very high population growth.
Sometimes structural unemployment arises due to structural changes in the
economy. Due to structural changes, some sectors grow faster than others.
Further, there is a change in production technology in the economy also.
For example: introduction of electric vehicles in India. This will lead to
the demand for an altogether different type of repair services for electric
vehicles and the existing lot of mechanics will be unemployed unless they
are re-skilled.
(v) Disguised Unemployment: Disguised unemployment occurs when laborers
are employed, but their contribution to output is zero. It implies that the
marginal productivity of labour is zero. This type of unemployment is
quite common in agricultural sector of most over-populated poor countries.
Disguised unemployment can be explained with the help of Fig. 8.1.
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Issues in Indian Economy

Fig. 8.1: Disguised Unemployment

In Fig. 8.1, we measure labour on the x-axis and output on the y-axis. The curve
OAB is the total output curve. When we increase the labour input, there is an
increase in output. When labour employed is OL1, output produced is OQ1.
You should notice that output increases till labour input employed is OL2. The
maximum output is OL2. When labour input employed is greater than OL2, there
is no increase in output. In Indian agriculture, family labour is widely used. They
get engaged in work, but their contribution to output is negligible.
In Fig. 8.1, the segment L2L3 refers to disguised unemployment. If we withdraw
L2L3 quantity of labour, output does not decline and remains unchanged at OQ2.
It shows that L2L3 labour has zero marginal productivity.

8.3 NATURE AND EXTENT OF UNEMPLOYMENT

IN INDIA
In developed countries there is cyclical unemployment is very much prevalent
due to presence of business cycles. According to Keynes, the main cause of this
type of employment is low effective demand. But in India, as in many other less
developed countries, there exists chronic unemployment. Unemployment in India
for rural and urban areas is of different types. We present the typology of rural
and urban unemployment in India in Fig. 8.2.

Fig. 8.2: Types of Unemployment in Rural and Urban India

Rural Unemployment Scenario
Unemployment is caused by many factors such as over population, low skill
level, failure of planning, defective education system, slow economic growth,
134 and lack of capital.
Majority of India lives in villages. The following are the three main forms Unemployment in India
of unemployment in rural India: (a) Seasonal unemployment (b) Disguised
unemployment (c) Chronic unemployment. We have discussed the characteristics
of unemployment in the previous section. We discuss below certain characteristics
of unemployment in India.
a) Seasonal Unemployment: Agriculture is the main source of employment
in villages. As you know, agriculture is a seasonal occupation. Agricultural
labourer and farmers remain relatively free during certain months when
cultivation is not going on. During this time there are no supplementary
employment opportunities.
b) Disguised Unemployment: Disguised unemployment is widely prevalent in
rural India. Disguised unemployment takes place as there is no training of the
rural labour for non-agricultural occupations. The growing rural population
keeps on depending upon the same land area, as frequently witnessed in
agricultural joint families. It has been estimated that the extent of disguised
unemployment in Indian agriculture is to the extent of 22 per cent.
c) Chronic Unemployment: The workforce keeps on growing but employment
opportunities in rural areas remain limited. Consequently,, the number of
unemployed keeps in increasing. There is chronic unemployment, especially
among the landless agricultural workers.
Urban Unemployment Scenario
In addition to the residents of urban areas, many people migrate to urban areas in
search of jobs. Thus, the unemployment situation in urban areas is severe. Urban
unemployment has three prominent features: (i) There are thousands of educated
youth who are unemployed. This could be because of the flaws in our education
system. In many cases, the current education system does not impart requisite
skill required by industrial and services sectors. (ii) There is under-employment
in society in the sense that people do not get work for all days. Available jobs in
the industrial and services sector are not regular. (iii) Further, jobs available are
not according to the merit or qualification of job seekers. Many persons therefore
are under-paid.
Measurement of Unemployment in India
You may have come across two concepts: labour force and work force. ‘Labour
force’ includes all persons in the age group of 15 years and above who are willing
to work. Thus it includes both employed and unemployed persons. The persons
not included in the labour force are those who are retired, too ill to work, keeping
the house, or simply not looking for work. ‘Work force’ is somewhat narrower
– it includes the employed persons only. Thus the difference between the labour
force and the work force gives us the number of unemployed.
By employed persons we mean those who perform any paid work (thus
homemakers are not included) and those who have jobs. On the other hand, the
unemployed as a category includes people who are not employed but are actively
looking for work. While considering unemployment we do not take into account
those who are not in the labour force. We define unemployment rate as the number
of unemployed divided by the total labour force.
Measurement of unemployment has been a complex issue. All workers do not
have a regular salaried job; many workers search for jobs on a day to day basis.
Suppose, for example, someone worked for one day only in the last week. Should
we count him as employed? 135
Issues in Indian Economy In India, the National Statistical Office (NSO) (earlier known as National
Sample Survey Organisation - NSSO) has been conducting employment and
unemployment survey (EUS) every five years since 1972-73. The EUS measures
unemployment on the basis of four status: (i) the Usual Status (US); (ii) the
Usual Principal and Subsidiary Status (UPSS); (iii) the Current Weekly Status
(CWS); and (iv) the Current Daily Status (CDS). For the Usual Status (US) and
the Usual Principal and Subsidiary Status (UPSS), the reference period is one
year. The UPSS refers to the usual principal activity and the subsidiary activity
status of a person. The objective of UPSS is to assess the long term employment
status of a person. On the other hand, the objective of the CWS and is to assess
employment from a short term perspective. In the CWS approach, a person is
considered unemployed if (s)he did not get work even for one hour on any day
in the past one week.
The National Statistical office (NSO) of India started the Periodic Labour Force
Survey (PLFS) on a quarterly basis since April 2017. It considers current weekly
status (CWS) for estimation of unemployment rate. The PLFS gives data on
Labour Force Participation Rate, Worker Population Ratio, and Unemployment
Rate for different age groups. As of date, data is available for the period up to
January-March 2021.
Extent of Unemployment in India
There is a rise in the number of unemployed persons in India over the years,
despite rapid economic growth achieved by the country. It indicates a situation
of jobless growth, where production technology is becoming more and more
capital-intensive.
We present the number of unemployed persons and the number of jobs created
during various five year plans in Table 8.1. We observe from the table that during
the first five year plan the number of unemployed was 3.3 millions. The number of
new job seekers was 9 million, taking the total to 12.3 millions. During the Plan,
7 million new jobs were created. As a result, the number of unemployed increased
by the end of the first five year plan to 5.3 million. The number of unemployed
continued increasing in the subsequent five year plans. It was estimated that
9.2 million persons were unemployed at the beginning of Seventh Plan. It was
expected that this number would decline to 8.22 million by the end of the seventh
plan, but it did not decline. A similar feature continued in the subsequent five
year plans also.
Another set of data available from employment exchange records also point
out a similar trend – the number of unemployed in India has increased over the
years. Estimated number of unemployed persons as available from employment
exchange records is presented in Table 8.2. We observe that 17.84 million persons
were registered as unemployed in 1981, which increased to near 43.50 million
in 2016-17. The number is rising very quickly due to jobless growth of Indian
economy. Its projection for 2017-18 was 17.80 million.

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 Table 8.1: Estimates /Extent of Employment and Unemployment in the Unemployment in India
Five Year Plans (in Millions)
Plan/ Particulars First Second Third Fourth Fifth Sixth Seventh Eighth Ninth Tenth Eleventh
(1951- (1956-61) (1961- (1969- (1974- (1980- (1985-90) (1992- (1997- (2002- (2007-
56) 66) 74) 79) 85) 97) 02) 07) 12)
1. No. of 3.3 5.3 7.1 12.6 14.0 12 9.2 23 18.0 34.85 21.5
unemployed at
the beginning of
Plan
2. New job seekers 9.0 11.8 17.0 20.2 22.0 34 39.38 35 405.4 378.65 432.02
during the plan
period
3. The total number 12.3 17.1 24.1 33.0 36.0 46 48.58 58 423.4 413.50 453.52
of unemployed
(1+2)
4. Additional job 7.0 10.0 14.51 19.0 15.4 36.8 40.36 40 416.4 392.20 451.53
created during the
Plan
5. No. of 5.3 7.1 9.6 14.0 20.6 9.2 8.22 18 7.0 21.5 1.99
unemployed at
the end of the
Plan

Source: Economic Survey 2015-16 and Five Year Plan Documents

Table 8.2: Number of Unemployed as per Employment Exchange Records
Year Registered Unemployed
April 1981 17.84
April 1982 19.75
April 1983 14.83
April 1984 23.55
April 1985 26.27
April 1986 30.13
April 1987 30.36
Nov 1992 36.77
Aug 1993 36.49
Aug 1994 36.78
April 1997 30.00
April 1998 40.00
2016-17 43.50

Source: Tenth Five Year Plan document and various issues of Economic Survey.

Another source of data on unemployment among educated youth is the

employment exchange records. According these records also, there is an increase
in the number of unemployed in India over the years. We observe from Table
8.2 that 17.84 million persons were registered as unemployed in 1981, which
increased to about 43.50 million in 2016-17. The number of unemployed in India
has increased very fast over the years. Table 8.2 shows the unemployment and
unemployment figures for different years.
Table 8.3: Employment and Unemployment Scenario in India
Variable Unit/ Year 1999-2000 2001-02 2006-07 2016-17 (P)
Labour Force Million 363.33 378.21 413.50 524.10
Employment Million 336.75 343.36 392.35 518.20
Unemployment per cent 7.32 9.21 5.11 5.6
No. of Unemployed Million 26.58 34.85 21.5 5.8

Source: Tenth and Eleventh Five Year Plan Documents, and Economic Survey 2016-17 137
Issues in Indian Economy As mentioned earlier, the PLFS started in 2017-18 and quarterly data on
unemployment rate is available since then on a regular basis. As per the PLFS
data, unemployment rate in India in the age group 15 years and above was 8.8
per cent in 2019-20 according to current weekly status (CWS) and 4.8 per cent
according to usual status.
Table 8.4: Unemployment Rates in Recent Years according to PLFS
(in per cent)
Status 2019-20 2018-19 2017-18
male female person male female person male female person
Rural
Usual status 4.5 2.6 4.0 5.6 3.5 5.0 5.8 3.8 5.3
CWS 8.7 5.5 7.9 8.7 7.3 8.4 8.8 7.7 8.5
Urban
Usual status 6.4 8.9 7.0 7.1 9.9 7.7 7.7 10.8 7.8
CWS 10.6 12.4 11.0 8.9 12.1 9.5 8.8 12.8 9.6
All-India
Usual status 5.1 4.2 4.8 6.0 5.2 5.8 6.2 5.7 6.1
CWS 9.3 7.3 8.8 8.8 8.7 8.8 8.8 9.1 8.9

Source: Periodic Labour Force Survey (Annual Report, July 2021), NSO

Self-assessment Exercise A
1) Define the concept of unemployment.
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2) Distinguish between the concepts of seasonal unemployment and disguised
unemployment.
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3) Distinguish between labor force and work force.
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4) Describe in brief the extent of unemployment in India.
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8.4 CAUSES OF UNEMPLOYMENT

Now let us discuss the important causes of persisting unemployment in India.

138 (i) Rapid Growth of Population: Population of India has been growing rapidly
 since 1951. Death rate declined due to availability of medicines and healthcare Unemployment in India
but birth rate did not decline. Thus, population growth rate accelerated after
1950. During the 1960-1990 population growth was more than 2 per cent
per annum. While population growth rate has somewhat declined in recent
years, it continues to be very high some states of India. Accordingly, size
of the labour force is increasing while employment opportunities are not
increasing at the same pace. So unemployment is increasing over the years.
(ii) Low Economic Growth: Up to the fourth Five Year Plan (1951-74), growth
rate of the Indian economy was very low. Low economic growth (see table
8.4) rate is mainly responsible for unemployment in India as job opportunities
did not expand adequately. In recent years, since 2015-16, economic growth
rate has slowed down.
Table 8.4: Economic Growth Rate in Various Plan Periods
Five Year Plan/Year Average Annual Rate of Growth at
2004-05 Prices
April 1981 17.84
April 1982 19.75
April 1983 14.83
April 1984 23.55
April 1985 26.27
April 1986 30.13
April 1987 30.36
Nov 1992 36.77
Aug 1993 36.49
Aug 1994 36.78
April 1997 30.00
April 1998 40.00
2016-17 43.50

Source: Economic Survey 2015-16 and 2018-19.

(iii) Failure of Planning: Planning started in 1951. There is no doubt that India
has made progress during the plan period, yet all sections of society could
not gain from it. The rich became richer while the poor became poorer. Thus
economic growth was accompanied by increasing inequality in the country.
This was a major weakness of our planning. In addition, not much attention
was paid towards the problem of unemployment in the beginning. Planning
could not create as many jobs as the number of job seekers.
(iv) Neglect of Agriculture: Majority of population in India depend on
agriculture. However, agriculture was not paid much attention during various
five year plans. Comparatively less expenditure was made on this sector (see
Table 8.5), as a result of which agriculture could not develop fully. Neglect
of agriculture too is a cause of rural unemployment in India.
Table 8.5 shows that the share of agriculture in plan outlay has varied between
18 per cent and 25 per cent (except the First Plan). This share is much smaller
than the share of the agricultural sector in national income and employment.

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Issues in Indian Economy Table 8.5: Share of Agriculture in Total Expenditure
Five Year Plan Percentage Share in Total
Expenditure
First (1951-56) 37.00
Second (1956-61) 20.90
Third (1961-66) 20.60
Fourth (1969-74) 23.30
Fifth (1974-79) 20.50
Sixth (1980-85) 25.40
Seventh (1985-90) 21.00
Eighth (1992-97) 22.15
Ninth (2002-07) 20.10
Tenth (2007-12) 19.80
Eleventh (2007-12) 18.50

Source: Five Year Plan & Economic Survey, 2013-14.

(v) Neglect of Small and Cottage Industries: Small scale and cottage
industries are labour intensive. But these industries could not develop in
India appreciably. Technological upgradation and marketing became a major
problem for these industries. The five year plans laid more stress on capital-
intensive industries. Neglect of small scale industries is therefore another
cause of unemployment in India.
(vi) Slow Industrial Growth: Industrial growth rate has been very slow in India
due to many problems such as industrial disputes, strikes, lockouts, industrial
sickness, etc. These problems have increased urban unemployment.
(vii) Shortage of Capital: Till recent time period, there has been a shortage of
capital in India. We know that the rate of capital formation depends on the
rate of saving. If saving rate is high, capital formation rate will also be high.
Without adequate capital formation, overall expansion of the economy cannot
take place. Thus capital inadequacy leads to slower growth of jobs.
(viii)Defective Education System: Education system in India is not based on
employment. Every year millions of boys and girls come out of colleges and
universities but they are not absorbed in any suitable job. Emphasis is laid
on ‘general’ education rather than ‘vocational’ one. Our education system
has led to rapid increase in white collar unemployment.
(ix) Lack of Mobility: Even these days, many Indians are superstitious. Marginal
farmers and laborers are so much attached to their land and birth place
that they do not want to leave it even if they do not have any work to do.
Similarly, many skilled labour and educated youth do not want to migrate
to other regions. There are of course differences in language and culture
across states, which discourage mobility. As a result, in some regions there
is shortage of labour while in other regions there is surplus. Shortage of
farm labour in Punjab is a valid example. Thus, lacks of mobility, cultural
differences, customs and tradition are also responsible for unemployment.
(x) Under-Utilization of Installed Capacity: Our productive capacity is
not utilized fully in many industries so there exists limited employment
opportunities. Various causes like lack of working capital, skilled labour,
raw material and infrastructural facilities inhibit full utilization of capacity.
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(xi) Modernization: In the modern time, many industries have adopted capital Unemployment in India
intensive modern techniques. Consequently, unemployment has increased
as machines have replaced the labourers.
(xii) Other Factors: Apart from the factors mentioned above, there are several
others which worsens unemployment situation in India. Non-availability of
good quality infrastructure; shortage of essential inputs such as electricity,
raw materials, and credit; non-availability of skilled labour and modern
technology; etc.

8.5 CONSEQUENCES OF UNEMPLOYMENT

Unemployment has many adverse consequences.
(i) Poverty: Unemployment leads to loss income for a household, which in
turn leads the household to poverty. The number of unemployed in India is
very large. Problem of poverty due to unemployment has become a serious
problem.
(ii) Under-utilization of Human Resources: Due to lack of employment
opportunities, it has not been possible to fully use the available human
resources. Human beings are not in a position to contribute to the national
income. When human resources are not utilized properly, it results in loss
of national output.
(iii) Political Instability: The problem of unemployment has the potential of
creating political instability in the country. Unemployed youth may indulge
in activities that are detrimental to the development of a country.
(iv) Social Evil: Unemployment can lead to anti-social activities. It may lead
to social evils such as drugs, theft, gambling, etc. Government needs to be
very alert to check these social evils.
(v) Economic Exploitation: Due to large scale unemployment, the employers
try to exploit people by giving lower wages. Workers have to work for longer
hours; they are not paid according to their ability and the quantity of work
done.
Taking into account the adverse effects of unemployment, the government must
take steps towards employment generation.

8.6 POLICY INITIATIVES FOR EMPLOYMENT

GENERATION IN INDIA
Various policy measures have been taken by the government to reduce the problem
of unemployment. Some of the efforts made by the government in this regard
are given below.
1. Emphasis on Small Scale and Cottage Industries: To reduce the problem
of unemployment, emphasis has been laid on development of small scale and
village industries. Cottage and small scale industries are labour intensive,
which means that these employ large number of workers. Government has
given various incentives to set up these industries during five year plans
2. Check on Population Growth: Government has made efforts to check
the population growth. To achieve this objective, the government has
emphasized education of girl child, provision of health facilities, and creation
of awareness among people.
141
Issues in Indian Economy 3. Establishment of Employment Exchanges: The government has established
employment exchanges for registration of people seeking employment and
dissemination of information regarding available vacancies. These days,
the Internet has played an important role in recruitment process. Every
employment exchange these has its online portal. Besides, in order to give
information about the vacancies to the general public, ‘Employment News.’,
a weekly paper, is published in different languages.
4. National Education Policy-2020: To tackle the problem of unemployment,
the National Education Policy-2020 has been formulated. Apart from other
issues, it emphasizes on vocational education.
5. Rapid Economic Development: Economic development in different sectors
creates new opportunities of employment. The government is trying to
accelerate the pace of growth by developing the different sectors so that
new employment opportunities can be created.
e) Rural Employment Guarantee Act: The Mahatma Gandhi National Rural
Employment Guarantee Act (MGNREGA) was launched in 2005. The Act
aims at providing at least 100 days of guaranteed wage employment in
a financial year to every rural household, with a stipulation of one-third
participation of women. In the process, the MGNREGA creates community
assets so that problems like chronic poverty, drought, deforestation, soil
erosion, etc. can be addressed. In budget 2019-20, Rs. 6000 crore were
allocated for MGNREGA. The number of beneficiaries under this programme
was 7.8 crores in 2019.
f) National Rural Livelihood Mission (NRLM): The NRLM is also called
Ajeevika. It was started in 2013-14 with an objective of organizing all
rural poor households and nurturing them till they emerge out of poverty.
Now, NRLM is renamed as Deendayal Antayodaya Yojana. It provides
opportunities to poor households to have gainful self-employment and skilled
wage employment. Self-Help Groups (SHG) formed by women has been
successful in many cases to provide livelihood to households and raise their
income.
g) Micro Unit Development Refinance Agency Bank (MUDRA Bank): The
Government has set up the MUDRA Bank in April 2015. It meets credit
requirements of micro-enterprises and self-employed persons. In order to
increase output and employment, entrepreneurs can avail loan up to Rs.10
lakh at lower rate of interest.

Self-assessment Exercise B
1) What are the main causes of unemployment in India?
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2) Write a brief note on the consequences of unemployment in India.
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3) Mention at least four initiatives taken by the government to reduce the Unemployment in India
problem of unemployment in India.
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8.7 LET US SUM UP

Unemployment is a serious problem for an economy. Unemployment could be
seasonal, chronic, disguised or structural. Unemployment is observed in both
rural and urban areas. As per the PLFS data, unemployment rate in India in the
age group 15 years and above was 8.8 per cent in 2019-20 according to current
weekly status (CWS) and 4.8 per cent according to usual status.
Unemployment has serious consequences for the households and for the
economy. Apart from poverty and psychological stress to the person concerned,
unemployment results in wastage of valuable resources for the country. The
government has initiated various policy measures to reduce unemployment in
India. Many developmental schemes are being implemented with this objective.

8.8 KEY WORDS

Unemployment: The situation in which a person is ready to work at prevailing
market wage rate but he does not get work. In simple words, when the number
of job seekers is more than number of jobs, it is termed as unemployment.
Full Employment: The situation when the number of job seekers is less than
the number of available jobs.
Under-employment: It refers to the situation when the person gets employment
not for full time or (s)he works at a job that is below her/his educational
qualification and ability.
Disguised Unemployment: It refers to a situation when the marginal productivity
of labour is zero.
Automation/Mechanization: It refers to the use of capital-intensive technology,
computers and machinery.
Dependency Ratio: It is the ratio of dependent population to the working
population. A high dependency ratio means less number of workers in the society.
Rural Unemployment: It refers to the unemployment found in rural areas in the
form of disguised, seasonal or chronic unemployment.
Cyclical Unemployment: It refers to the unemployment caused by business
cycle during the phases of recession and depression.
Frictional Unemployment: It refers to a temporary phase of unemployment when
where workers shift between jobs. Job opportunities are enough but workers are
unemployed due to certain imperfections or frictions in the economy.

8.9 TERMINAL QUESTIONS

Short Answer Type Questions
1) What is meant by unemployment? Briefly explain any four types of
unemployment in India.
143
Issues in Indian Economy 2) Describe four main reasons of unemployment in India.
3) Distinguish between seasonal unemployment disguised unemployment.
4) Give five suggestions to solve the unemployment problem in India.
5) Explain the nature of unemployment problem in developing countries.
6) Describe four consequences of unemployment in India.
7) What is meant by disguised unemployment? In what respects it affect
developing countries?
8) Briefly mention the estimates of employment and unemployment in India.
Long Answer Type Questions
1) Discuss nature, extent and types of unemployment in India.
2) What is unemployment? Discuss its causes and solutions in developing
countries.
3) What are main causes of unemployment in India? What measures do you
suggest to solve this problem?
4) Explain government policy measures to reduce unemployment problem in
India. Also critically evaluate these measures.
5) Discuss main types of unemployment in developing countries. Also give
suggestions to solve these types of unemployment.
6) State the present position of unemployment in India. Also explain main steps
taken by the government to solve this problem.
7) Describe the main features of MGNREGA. Also highlight such other
government schemes to reduce unemployment.

FURTHER READINGS
The following text books may be used for further in-depth study on the topics
dealt with in this unit.
Brown C.V, Unemployment and Inflation, Disha Publication, Delhi
Edwards, E.O. (Ed.). Employment in Developing Countries, Columbia University
Press, New York.
Hawkins K., Unemployment, Penguin Books, Second Edition.
Johnson Peter and Thomas Barry, Economic Perspective on Key Issues.
Sen Amartya, Employment, Technology and Development, Oxford University
press, London.

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