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One of the great failures of the Indian development
strategy over the decades, along with the persistence of poverty and
the slow rate of increase in human development indicators, has been
inadequate employment generation. This is not just a problem of welfare,
since it represents a huge waste of human resources that are crucial
to building the economy, and suggests that Indian growth could have
been both faster and more equitable if only the enormous labour reserves
had been productively utilised.
In the 1990s, it became fashionable among critics
of the mixed-economy planning-based strategy to argue that it was this
very strategy that was responsible for the slow rate of employment growth.
It was suggested that export pessimism and an inward looking import
substitution policy had discouraged employment-intensive export production
and imposed high-cost capital-intensive production which had low linkage
effects with the rest of the economy and did not lead to more use of
labour.
These critics argues that opening up the economy
to more liberal external trade and foreign investment would not only
generate a higher rate of output growth but also automatically create
a restructuring of production which would mean a significant increase
in labour-intensive production and therefore also substantial increases
in employment.
The initial evidence from the early 1990s suggested
that this promised increase had not really materialised, especially
according to the small samples carried out by the NSS. But this was
dismissed by the votaries of neoliberal reforms, who maintained that
not only was it likely that the effects of the reforms would take some
years to work through, and that therefore it was then too early to come
to any judgement, but that in any case the small samples were did not
provide sufficient statistical basis on which to come to any conclusion.
That is why the results of the first large sample
NSS round since 1993-94, that is the 55th Round which was conducted
over 1999-2000, are so significant. These provide the first comprehensive
estimate of changes in employment growth and patterns over the 1990s,
since the other available data on organised sector employment covers
such a small proportion of the total labour force. And since the survey
deals with a large sample, it has relevance not only for the all-India
pattern but also the experience of different states.
The key results of the 55th Round regarding employment
and unemployment have just been released. These reveal a sharp, and
even startling, decrease in the rate of employment generation across
both rural and urban areas. Indeed, so dramatic are the fall of work
force participation and the slowdown in the rate of employment growth
that they call into serious question the pattern of growth over this
decade.
Thus, as Chart 1 shows, the per cent of rural population,
both male and female, showing some usual status employment, has not
only declined over the 1990s, but in 1999-2000 was at the lowest level
in thirty years. Even in urban areas, as shown in Chart 2, there is
evidence of decline since 1993-94, although the levels are not the lowest
over the period as in rural areas.
Chart 1 >>
Chart 2 >> |
