What Is Unemployment?

Unemployment represents the number of

people in the work force who want to work but
do not have a job. It is generally stated as a
percentage and calculated by dividing the
number of people who are unemployed by the
total work force.
The work force is made up of those people
who want to work; it excludes people who are
retired, disabled, and able to work but not
currently looking for a position; for instance,
they may be taking care of children or going to
college.
Causes of Unemployment
The government defines those who want to
work as people who have actively looked for
work within the past four weeks and
determines the number of people currently
unemployed through a monthly survey called
the Current Population Survey.
People can be unemployed for many reasons:
 They quit their position and are looking for

a new one.
  They were laid off due to lack of work and
haven't yet been rehired.
 Their company reduced the work force,
and they are seeking a new position. This
can be due to a local condition, when the
company closes a plant or division, or a
national condition, when the economy
slows and many companies reduce their
work force.
 They have recently returned to the work
force - perhaps from pregnancy or
attending school - and haven't yet located a
position.
 The need for their skill set has gone down,
and there are limited positions available,
which may lead to unemployment until
they train for a new position.
 Technology has reduced the need for their
type of position.

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

Types of Unemployment in India:

1. Open Unemployment:
Open unemployment is a situation where in a
large section of the labour force does not get a
job that may yield them regular income. This
type of unemployment can be seen and
counted in terms of the number of unemployed
persons. The labour force expands at a faster
rate than the growth rate of economy.
Therefore all people do not get jobs.
2. Disguised Unemployment:
It is a situation in which more people are
doing work than actually required. Even if
some are withdrawn, production does not
suffer. In other words it refers to a situation of
employment with surplus manpower in which
some workers have zero marginal
productivity.
So their removal will not affect the volume of
total production. Overcrowding in agriculture
due to rapid growth of population and lack of
alternative job opportunities may be cited as
the main reasons for disguised unemployment
in India.
3. Seasonal Unemployment:
It is unemployment that occurs during certain
seasons of the year. In some industries and
occupations like agriculture, holiday resorts,
ice factories etc., production activities take
place only in some seasons. So they offer
employment for only a certain period of time
in a year. People engaged in such type of
activities may remain unemployed during the
off-season.
4. Cyclical Unemployment:
It is caused by trade cycles at regular intervals.
Generally capitalist economies are subject to
trade cycles. The down swing in business
activities results in unemployment. Cyclical
unemployment is normally a shot-run
phenomenon.
5. Educated Unemployment:
Among the educated people, apart from open
unemployment, many are underemployed
because their qualification does not match the
job. Faulty education system, mass output,
preference for white collar jobs, lack of
employable skills and dwindling formal
salaried jobs are mainly responsible for
unemployment among educated youths in
India. Educated unemployment may be either
open or underemployment.
6. Technological Unemployment:
It is the result of certain changes in the
techniques of production which may not
warrant much labour. Modern technology
being capital intensive requires less labourers
and contributes to this kind of unemployment.
7. Structural Unemployment:
This type of unemployment arises due to
drastic changes in the economic structure of a
country. These changes may affect either the
supply of a factor or demand for a factor of
production. Structural employment is a natural
outcome of economic development and
technological advancement and innovation
that are taking place rapidly all over the world
in every sphere.
8. Underemployment:
It is a situation in which people employed
contribute less than their capacity to
production. In this type of unemployment
people are not gainfully employed. They may
be employed either on part-time basis, or
undertake a job for which lesser qualification
is required. For example a Post Graduate may
work as a clerk for which only S.S.L.C. is
enough.
9. Casual Unemployment:
When a person is employed on a day-to-day
basis, casual unemployment may occur due to
short-term contracts, shortage of raw
materials, fall in demand, change of ownership
etc.
10. Chronic Unemployment:
If unemployment continues to be a long term
feature of a country, it is called chronic
unemployment. Rapid growth of population
and inadequate level of economic
development on account of vicious circle of
poverty are the main causes for chronic
unemployment.
11. Frictional Unemployment:
Frictional unemployment is caused due to
improper adjustment between supply of labour
and demand for labour. This type of
unemployment is due to immobility of labour,
lack of correct and timely information,
seasonal nature of work. etc.

Causes of Unemployment in India:

The important causes of Unemployment in
India are as follows:
1. Rapid growth of population and increase in
labour force.
2. Underdevelopment of the economy.
3. Slow growth in the agricultural sector.
4. Defective system of education.
5. Absence of manpower planning.
6. Degeneration of village industries.
7. Inappropriate technology.
8. Slow growth of industrial sector.
9. Immobility of labour.
10. Jobless growth.
The following are the main causes of
unemployment:
(i) Caste System:
In India caste system is prevalent. The work is
prohibited for specific castes in some areas.
In many cases, the work is not given to the
deserving candidates but given to the person
belonging to a particular community. So this
gives rise to unemployment.
(ii) Slow Economic Growth:
Indian economy is underdeveloped and role of
economic growth is very slow. This slow
growth fails to provide enough unemployment
opportunities to the increasing population.
(iii) Increase in Population:
Constant increase in population has been a big
problem in India. It is one of the main causes
of unemployment. The rate of unemployment
is 11.1% in 10th Plan.
(iv) Agriculture is a Seasonal Occupation:
Agriculture is underdeveloped in India. It
provides seasonal employment. Large part of
population is dependent on agriculture. But
agriculture being seasonal provides work for a
few months. So this gives rise to
unemployment.
(v) Joint Family System:
In big families having big business, many such
persons will be available who do not do any
work and depend on the joint income of the
family.
Many of them seem to be working but they do
not add anything to production. So they
encourage disguised unemployment.
(vi) Fall of Cottage and Small industries:
The industrial development had adverse effect
on cottage and small industries. The
production of cottage industries began to fall
and many artisans became unemployed.
(vii) Slow Growth of Industrialisation:
The rate of industrial growth is slow. Though
emphasis is laid on industrialisation yet the
avenues of employment created by
industrialisation are very few.
(viii) Less Savings and Investment:
There is inadequate capital in India. Above all,
this capital has been judiciously invested.
Investment depends on savings. Savings are
inadequate. Due to shortage of savings and
investment, opportunities of employment have
not been created.
(ix) Causes of Under Employment:
Inadequate availability of means of production
is the main cause of under employment.
People do not get employment for the whole
year due to shortage of electricity, coal and
raw materials.
(x) Defective Planning:
Defective planning is the one of the cause of
unemployment. There is wide gap between
supply and demand for labour. No Plan had
formulated any long term scheme for removal
of unemployment.
(xi) Expansion of Universities:
The number of universities has increased
manifold. There are 385 universities. As a
result of this educated unemployment or white
collar unemployment has increased.
(xii) Inadequate Irrigation Facilities:
Even after the completion of 9th five plans,
39% of total cultivable area could get
irrigation facilities.
Due to lack of irrigation, large area of land can
grow only one crop in a year. Farmers remain
unemployed for most time of the year.
(xiii) Immobility of labour:
Mobility of labour in India is low. Due to
attachment to the family, people do not go to
far off areas for jobs. Factors like language,
religion, and climate are also responsible for
low mobility. Immobility of labour adds to
unemployment.
All these factors add to unemployment.
REMEDIAL MEASURES :
Essay on Remedial Measures
For Unemployment – The problem of
unemployment is growing day by day in India.
It is becoming more and more complex also.
Such a complex problem will have to be
tackled in a planned manner. No single
solution can be an effective remedy for this
problem. Multi-pronged attempt is needed to
face it in an effective manner. It is possible
only with the combined efforts of the
government and the public.
I. Population Control:
The growing population in India is a major
cause of many socio-economic problems. Our
population is growing on an average at the rate
of 2.48% per year. We are adding every year
more than 120 lakh to 130 lakh people to our
population. At the same time, about 5 million
people attain the employable position every
year.
Job opportunities are not increasing at the
same rate to accommodate the growing
population. Hence the population growth has
to be checked. Family planning programme
has to be made more popular and other
suitable steps are to be taken to minimize or
neutralize its growth.
II. Promoting Economic Development:
The main solution for the problem lies in
achieving substantial economic development.
This can be materialized, only if attention is
paid equally to agriculture and industry.
A. Promoting Economic Development:
(i) Irrigation Projects:
The employment opportunities in the
agricultural sector may be increased through
the construction of major and minor irrigation
projects, expansion and development of
plantation, intensive agriculture and
horticulture. Unutilised land may be brought
under- cultivation.
(ii) Development of Fisheries:
Forest and Animal Husbandry. The
development of forest and fisheries and
encouragement of animal husbandry [dairy
farming, poultry, piggery, etc.] is also a major
step in the direction of improving agricultural
production.
(iii) Encouragement of Cottage and
Household Industries:
In the Indian context, cottage and household
industries which are often associated with
agriculture play a vital role in the development
of economy. Hence they should be given due
encouragement. Basket making, brick-making,
toy-making, beedi rolling, agarbati making,
carpentry and furniture making, leather works,
carving, smithery, and such other works are to
be encouraged to keep our people engaged
with work that fetch economic rewards.
(iv) Encouragement for Growing
Commercial Crops:
Commercial crops can make agricultural tasks
economically attractive. Commercial crops
such as areca, coffee, tea, pepper, ginger,
cardamom, cashew, tobacco, ground nut,
vegetables and fruits, etc., can bring good
income to the farmers. Due encouragement is
to be given to the farmers to grow such
commercial crops.
(v) Attractive Local Programmes and
Projects:
Depending upon the local needs and feasibility
new agricultural programmes and projects are
to be launched so that the young people of the
area get new opportunities to use their talents
and energy for the developmental
programmes.
The U.P. Government, for example,
introduced in 1990-91, a land army called
“Bhoomi Sena”. The Bhoomi Sainiks [young
men of the local area] are given funds by the
state government in the form of bank loans for
the aforestation of land.
B. Industrial Development:
Planned development of industries is essential
for creating more and more job opportunities.
Development of industries may include: (a)
large-scale industries, (b) small scale
industries, and (c) village and cottage
industries including handicrafts. Proper
balance should be maintained between
agricultural growth and industrial
development, so that industry would not
destroy handicrafts and household industries.
The unchecked process of mechanization and
the domination of multinational companies are
adversely affecting the creation of new job
opportunities. In the name of industrial growth
new labour-saving machine are installed
which are taking away the jobs of men.
Gandhiji had opposed the process of
mechanization in this regard. Sufficient care
should be taken to see no new machine takes
away the jobs of existing workers.
The process of economic liberalization let
loose by the central government recently has
given new scope for the multinational
companies to establish their domination over
the indigenous industries. The governmental
invitation for these companies may erode the
job opportunities for millions of people.
III. Education Reforms:
Education has much to do with employment
and unemployment. Our education is not much
job- oriented, it is degree-oriented. It caters
more to urban needs rather than to rural
requirements.
It has not completely come out of the British
colonial bias. Hence, it has failed to create an
army of self- reliant, self-dignified young men
and women. It very badly requires a thorough
overhauling.
Throughout the country, primary education
should be made more popular and effective.
Much publicized slogan “operation black-
board” must be transformed into reality. Our
villages should become the centres of
concentration in this regard. At the same time,
some control has to be established over higher
education.
Long back in 1957, the then chairman of the
UGC, Sri C.D. Deshmukh, had reiterated that
we shall have to restructure university
education by and large to the number of
university educated men and women that the
country will be needing from time to time.
Due practical training should be given to our
educated youths to help them to pursue one or
the other vocation, and proper guidance and
information should be given to them regarding
new job opportunities. Employment guidance
bureaus and employment exchange agencies
can play a vital role in this regard.
IV Five-Year Plans:
Almost all the Five-Year Plans have given
utmost importance to generate as much
employment opportunities as possible. They
have given priority to agricultural growth,
industrial development and creation of vast
employment opportunities. Expansion of
employment opportunities by making use of
the available man power and natural resources
was indeed, the main aim of the Third Five-
Year Plan.
Though the Govt. had spent about Rs. 180
crores for creating employment opportunities
in the First Five – Year Plan, there were about
5.3 million unemployed people at the end of
the Plan period.
From the beginning of the First Plan [1951 -
56] till the completion of the 10th Plan in 2007
the number of the unemployed people went on
increasing in spite of the efforts made by the
planning system to provide maximum number
of jobs.
It was estimated that during the Tenth Plan
[2002-07], the new entrants to the labour force
would be around 35 million. Adding to this,
the backlog of 35 million unemployed people,
the job requirements of the Tenth Plan would
be around 70 million.
“Since the economy at least would be able to
create 50 million jobs, the backlog of20
million will remain at the end of the Tenth
Plan. But if proper policies are pursued, the
rate of unemployment which was 9.21% in
2001-02 would decline at 5.11% in 2006-07”
Employment Requirements during the
11th Plan:
On account of the increasing participation of
females, the total increase in labour force will
be around 65 million during the 11th Plan. To
this may be added the present backlog of
about 35 million. Thus, the total job
requirements of the 11th Plan workout to be
100 million.
The planners intend to provide 65 million
additional employment opportunities. Even
then, the 11th Plan will not create full
employment, but it will at least ensure that the
unemployment rate falls somewhat.
Promotion of Employment Generation in
the 11th Plan:
The 11th Plan intends to generate additional
employment opportunities mainly in the
services and manufacturing sector. Measures
would need to be taken in the Plan to boost, in
particular, labour intensive manufacturing
sector such as food processing, leather
products, footwear, textiles and service sectors
such as tourism and construction.
The planner’s state. “Organised sector
employment would double over the
11th Plan… but this would leave about 55
million new workers for the unorganized
sector to absorb.” “The 11th Plan aims to
increase private organized sector employment
ambitiously by at least 10 million. Along with
the public sector, organized sector jobs would
then expand by over 15 million, a growth rate
of about 9% per annum. This would still leave
nearly 50 million new workers to be absorbed
in non- agricultural unorganized employment
“.
Generation of Employment Opportunities
by Information Technology [IT]:
It is heartening to note that information
technology [IT] has opened enormous
opportunities for educated youth in the
country. It is estimated that one segment of IT
industry that is, computers which includes –
both hardware and software, computer
engineers and systems analysts is having a
million jobs at present.
In addition to this, the IT sector provided 2.2
million jobs to computer professionals and
other related personnel engaged in IT sector. It
is estimated [as per NASSOM-McKinsey
Report 1999] that by the end of the year 2008,
IT enabled services will provide 11 million
jobs and generate a revenue of 17 to 18 billion
U.S. dollars. In this sense, IT industry has
great future in expanding employment
opportunities.
What is disturbing in the present economic
situation is that IT education is very costly and
IT jobs are being grabbed by the relatively
rich section of the society. The Government
here has a major role to play in expanding
computer education to rural areas in the
country so that the capabilities of the people
are developed to acquire better quality jobs in
the IT sector.
To conclude, it could be said that the planning
Commission has optimistic view of the
economy’s employment potential. As per its
report, “as against 3.9 million employment
opportunities created during 1993 and 1999,
additional employment generated during 1999
and 2002 averaged 8.4 million per year. There
is need to increase it to 10 million per year.”
Employment Guarantee Act – 2005
[National Rural Employment Guarantee
Act]:
Under the National Common Minimum
Programme of the UPA Government adopted
in Sept 2004, and as per the advice of the
National Advisory Council, the Govt, passed
the National Rural Employment Guarantee
Act in 2005. The main features of the Act are
as follows:
1. Every household in rural India will have a
right to at least 100 days of guaranteed
employment every year for at least one adult
member per family.
2. The employment will be in the form of
casual manual labour at the legally fixed
minimum wage that is, Rs. 60/- per day.
3. Work should be provided in the local area,
that is, within the radius of 5 K.M.
For whatever reason, if work is not given, the
person shall be paid a daily unemployment
allowance. This allowance will be at least 1/3
of the minimum wages.
For non-compliance with rules, strict penalties
have been laid down.
The gram sabha will monitor the work of the
gram panchayat by way of social audit.
The District Collector / Chief Executive
officer will be responsible for the programme
at the district level.
Probable Cost of this Employment
Guarantee Programme:
It is estimated that employment Guarantee
Programme will cost at least 1% of the GDP
[Gross Domestic Product], The calculations
reveal that the said – programme will cost Rs.
100/- per person per day at 2004-05 prices.
This includes 60/-Rs. as wages and Rs 40/- for
the non-labour costs [including materials and
administrative costs].
Thus, the total cost for providing 100 days of
employment in a year per person will be Rs.
10,000/-. As per 2001 Census, there were 20
crores of people that is, 4 crore households,
living below the poverty line. Thus, the
programme per year will cost Rs. 40,000/-
crores [Rs. 10,000/- per person multiplied by 4
crore households].
As per this scheme, the Centre will bear 80%
of the total cost [that is, 60% as wage
component and 20% as share in materials
component] and the State Govt. will share the
remaining 20% of the total cost.
The Centre is however, conscious of the fact
that once the programme gathers momentum,
democratic pressures are bound to enlarge the
programme to all unemployed and also to
withdraw the limit of 100 days and make it a
programme operative throughout the year.
Critical Remarks about the Programme:
An important aspect of this Employment
Guarantee Act is that, it gives a legal right to
the people enforceable in court. This will
increase the bargaining power of the people. It
also makes administration accountable for if
the jobs are not provided; unemployment
allowance will have to be paid.
The critics have raised their own doubts about
the practical benefits of this Act. The
experience of Maharashtra is also not
encouraging. This programme has been
implemented in Maharashtra for the past 30
years costing the State more than Rs 9,000
crores and generating 370 crore mandays. But
the programme has not produced adequate
results other in terms of poverty reduction or
reduction in unemployment.
The programme still continues after 30 years
without any decline in the demand for
unskilled wage work under this scheme. No
dramatic achievements have been made in
poverty reduction or in unemployment
reduction in the state. Critics also say that in
fact, Maharashtra has done poorly as
compared with other states.
Noted economist Lord Meghan and Desai
considered this NREGA scheme as only a
“palliative” a temporary measure and not a
cure for the problem. Dr. C.H. Hanumanth
Rao commented that the scheme was a failure
in Maharashtra because it was not linked to
the building up of rural infrastructure, such as
rural irrigation, rural roads, etc.

EMPLOYMENT GENERATION
PROGRAMME BY GOVT. OF INDIA :
The following steps have been taken by Govt,
to increase employment opportunities:
1. Integrated Rural Development
Programme (IRDP):
In 1978-79, government of India introduced
IRDP to create full employment opportunities
in rural areas. Under this programme
agriculture, animal husbandry, forests,
fisheries, small and cottage industries,
construction of roads and canals etc. are to be
developed in all the 5111 development blocks.
Moreover, to provide more employment, in
the Seventh Plan a sum of Rs. 312 crores was
spent on this programme. It benefited 182 lakh
families. In 1995- 96 about 21 lakh families
have been benefited.
2. Drought Prone Area Programme
(DPAP):
This programme was launched in 70 such
districts of 13 states as were prone to drought.
The programme has proved fruitful
particularly in removing seasonal
unemployment. In Sixth Plan, the programme
provided 17 crore and 70 lakh man-days of
employment.
In the same period, a sum of Rs. 301 crores
was made on the programme. In Seventh Plan,
Rs. 474 crores has been spent for the
programme.
3. Training for Self-Employment:
This programme was launched on 15th
August, 1979 by the Government of India. It is
called National Scheme of Training of Rural
Youth for Self Employment (TRYSEM). The
main objective of this programme is to reduce
unemployment among the youth. During
Seventh Plan about 11.6 lakh youth were
imparted training under the programme.
During training period, young men are given
financial assistance. On completion of
training, they are asked to prepare project
report. Arrangements are made to get them
financial assistance from the banks. Every
trained youth is given a financial help varying
from Rs. 3,000 to Rs. 5,000 to start his work.
In the Seventh Plan, under this programme,
Composite Rural Training and Technical
Centres (CRTTC) were set up to impart
training to rural youth. In 1995-96 training
was to be provided to 2.8 lakh rural youth
under this programme.
4. Jawahar Rozgar Yojana:
The Jawahar Rozgar Yojana was started on
28th April 1989. The objective of this Yojana
is to provide employment to at least one
member of each poor rural family for fifty to a
hundred days a year at a work place near his
residence. A special feature of the scheme is
that 30% of the employment generated will be
reserved for women.
The Central government will finance 80% of
the programme and the state government will
have to bear only 20% of the expenditure of
this scheme. In 1989, National Rural
Employment Programme and Rural Landless
Employment Guarantee Programmes were
merged in the yojana.
5. Employment in Foreign Countries:
Government also helps people to get
employment abroad. Special agencies have
been set up to recruit people to serve in gulf
countries like Kuwait, etc.
6. Self-employment to Educated
Unemployed Youth:
In 1983, a scheme namely self-employment of
educated unemployed was initiated. Under this
scheme, loans up to Rs. 25,000 are given to
those educated unemployed who have no other
financial resources.
This scheme is enforced by District Industries
Centers. Government will give 25 percent as
subsidy of the loans given by the banks under
this scheme.
7. Nehru Rozgar Yojana (NRY):
This Yojana was started in 1989. There are
three schemes under it. (1) Under the first
scheme, subsidy is given to urban poor to set
up micro enterprises. In 1995, under this
programme, 1.25 lakh families have been
benefited. (2) Under the second scheme
arrangements have been made for wage-
employment to labourers in cities with less
than 10 lakh population by providing Indian
Economic Development and Elementary
Statistic 'them basic facilities.
In 1995, under this scheme 93 lakhs man-days
of employment have been provided. (3) Under
the third scheme, urban poor in the cities are
to be provided employment opportunities in
jobs like house repairing etc.
8. Small and Cottage Industries:
In order to reduce unemployment, government
if has made special efforts to develop small
and cottage industries. In 1995-96 about 33
lakh persons were employed in these
industries.
9. Development of Organized Sector:
Many people are getting employment in
organized public and private sectors. In 1995-
96, nearly 340 lakh persons got employment
in large industries.
In 1961, organized public sector provided
employment to 70 lakh persons; now it
provides employment to 1 crore and 92 lakh
persons. Likewise, in 1961 organized private
sector provided employment to 50 lakh
persons; in 2000 it provided employment to 89
lakh persons.
10. Employment Exchanges:
Government has set up about 890 employment
exchanges offering information on the
possible vocational avenues. These exchanges
do not provide employment directly but are of
great assistance in directing the job-seeker to
the possible areas of employment.
11. Employment Guarantee Scheme:
This Scheme has been launched in man; states,
such as, Maharashtra, West Bengal, Kerala,
Rajasthan etc. Under the scheme unemployed
persons are given economic assistance.
12. Employment Assurance Scheme:
The Employment Assurance Scheme (EAS)
was launched in 1994 in 1752 backward
blocks in the country. The main objective was
to provide 100 days of unskilled manual work
to the rural poor who are seeking employment.
13. Prime Minister's Integrated Urban
Poverty Eradication Program (PMIUPEP):
This programme has been implemented in
1995-96. This programme aims at to provide
employment to the urban poor. It will cover 50
lakh urban poor living in 345 towns. The
central government will incur an expenditure
of Rs. 800 crores this programme during a
period of Five years.
14. The Swaran Jayanti Rozgar Yojana:
This plan began on December 1, whereas
launching of this yojana, previous
programmes meant for providing employment
to urban unemployed like Nehru Rozgar
Yojana and Prime Minister Integrate Urban
Poverty Eradication Programme were merged
into it.
It aims at providing self-employment or wage
employment to urban unemployed and under-
employ persons. It comprises of two plans: (i)
Urban Self- Employment Programme-(USE
and (ii) Urban Wage Employment
Programme-(UWEP). Of the total expenditure
on "Yojana, 75 percent will be borne by the
centre and 25 percent by the state
governments. In the year 1997-98, a sum of
Rs. 125 crore was spending on this yojana.
15. Jawahar Gram Samridhi Yojana:
Jawahar Rozgar Yojana has been restructured
as Jawahar Gram Samridhi Yojana with effect
from April 1999. This Yojana has been
formulated to improve the quality of life of the
rural poor by providing the additional gainful
employment.
16. Other Programmes:
Govt, of India launched other employment and
poverty alleviation programme as under:
(i) Pradhan Mantri Gramodaya Yojana
(PMGY)
(ii) Pradhan Mantri Gramodaya Yojana
(Gramin Awas)
(iii) Pradhan Mantri Gramodaya Yojana-Rural
Drinking water project.
(iv) Pradhan Mantri Gram Sadak Yojana
(PMGSY)
(v) Autyodya Anna Yojana.
(vi) Jai Prakash Rozgar Guarantee Yojana
(JPRGY).
(vii) Valmiki Ambedkar Awas Yojana
(VAMBAY).
EMPLOYMENT GENERATION
PROGRAMME BY GOVT. OF WEST
BENGAL :
Udiyaman Swanirbhar Karmasansthan Prakalpa
(USKP)” 2008
Objective:Udiyaman Swanirbhar Karmasansthan
Prakalpa (USKP), is to assist unemployed youth
validly registered with employment exchanges in
West Bengal by providing subsidized credit from
commercial banks.
Implementing Authority:Directorate of
Employment under Labour Department, West
Bengal through its network of Employment
Exchanges implements the scheme through Banks
and other financial organization.
The maximum limit of loan available under the
scheme :
• The maximum limit of loan available under the
scheme is usually Rs. 50,000/- per individual,
including the margin money or subsidy provided b
the state government.
• The margin money or subsidy would be @ 25%
of the loan amount per person, subject to a
maximum of Rs 12,500/-.
• Number of beneficiaries of identical trade can
form cluster for joint activities under the scheme.
By formation of a cooperative society or any such
recognized body corporate, which will be termed
as Udiyaman Swanirbhar Karmasansthan Joutha
Prakalpa (USKJP)
• Except where categorically so mentioned, the
features of the scheme shall remain the same
irrespective of whether it is a Prakalpa or Joutha
Prakalpa.
Eligibility :
• The Beneficiary has completed his 18th year but
not the 45th year of age as on 1st day of April of
the year in which he has applied to come under the
scheme . The upper age limit is relaxable by five
years in case of physically handicapped persons as
well as persons belonging to scheduled
caste/schedule tribes and other backwards classes;
• He is registered at any Employment Exchange of
West Bengal for more than one year as on the 1st
day of April of the year for which he has applied
for the scheme; provided that no waiting period as
a registered unemployed shall be required for the
candidates belonging to physically challenged
category or Women, candidates belonging to the
scheduled caste, scheduled tribe, other backward
classes, ex-serviceman, minority category or EDP
trained candidates
• He is not a defaulter in any financial
organization or Banks.
• He is not avail benefits of Self Employment
Scheme for the Registered Unemployed (SESRU)
in West Bengal
How to apply :An eligible candidate may apply
for assistance under this scheme in a prescribed
form (to be collected from local Employment
Exchange) to the local Employment Exchange at
any time of the year.
For details the local employment exchange may be
contacted.Self Employment Motivation – cum-
Awareness camp :Keeping in view this general
aversion towards self employment, Directorate of
Employment, W.B has ventured into this new path
of Entrepreneurial Development Programme
throughout the State, using the network of
Employment Exchanges, with a two-fold
objectives:

• To make the unemployed youth aware about the

prospect and necessity of becoming self employed
in the present employment market scenario.
• To provide the prospective entrepreneurs some
pre-requisite information and guidance about
some aspects of self employment like preparation
of scheme, marketing strategy, banking
requirements etc.
Such programmes are being organised in
collaboration with RSETI (Rural Self
Employment Training Institute) of various
Nationalised Banks.

Bangla Swanirbhar Karmasansthan Prakalpa

(B.S.K.P)
Objective:
For individual youth the scheme is called “Atma
Maryada” and for groups of entrepreneurs it is
called “Atma Samman”. The objective of the
scheme is to generate self-employment in the state
through promotion of tiny scale units of
production, manufacturing, trade, service or any
other sector other than direct agriculture. It is a
continuing scheme. It covers both urban and rural
areas.
Implementing Authority :
The society for self-employment of unemployed
youth, West Bengal implements the scheme
through banks or other financial institutions.
The maximum limit of loan available under the
scheme :
For an individual maximum limit is Rs 10 (ten)
lakhs. For groups maximum limit is Rs 25
(twenty-five) lakhs including 10% margin money
contribution from the applicant.

The State Govt. shall provide a subsidy / grant of

20% of the project cost, subject to a maximum
limit of Rs 1,00,000/- (Rupees one lakh) only in
case of individual scheme (atma maryada) and
maximum of Rs 2,50,000/- (Rupees two lakhs
fifty thousands only in case of group schemes
(atma samman).Subsidy / grant will be disbursed
only after ensuring that the entrepreneur / group of
entrepreneurs have contributed 10% of the project
cost and margin money.
Eligibility :
• The scheme is applicable to all eligible
entrepreneurs, individually or in groups (subject
to a minimum of five members and all of them
belonging to the same area).
• More than one member from the same family is
not eligible to form a group (family for the
purpose of the scheme shall be deemed to consist
of spouse, dependent parents and dependent
minor children).
• Employees of Central govt. , State govt., govt.
Undertakings are not eligible to apply.
• An applicant should be an unemployed youth (
i.e. Not gainfully employed) and registered with
any employment exchange, and whose family
income (respective family income of an
individual member in case of a group) does not
exceed Rs. 15,000/- per month.
• The applicant must be within the age of 18 to 45
years as on the date on which he or she makes an
application for assistance under the scheme.
How to apply :
prescribed application for is available with the
block / self help group and self-employment
offices. For further details, the Block officer /
Municipality / borough self help group / self-
employment officer may be contacted.
Prime Minister’s Employment Generation
Programme (PMEGP)
Objective:
Government of India has approved the
introduction of a new credit linked subsidy
programme called Prime Minister’s Employment
Generation Programme (PMEGP) by merging the
two schemes that were in operation till 31.03.2008
namely Prime Minister’s Rojgar Yojana (PMRY)
and Rural Employment Generation Programme
(REGP) for generation of employment
opportunities through establishment of micro
enterprises in rural as well as urban areas.
Implementing Authority :
The scheme will be implemented by Khadi and
Village Industries Commission (KVIC), a
statutory organization under the administrative
control of the ministry of MSME as the single
nodal agency at the National level. At the State
level the scheme will be implemented through
state KVIC Directorates, State Khadi and Village
Industries Boards (KVIBS) and District Industries
Centers (DICs) and banks. .
The maximum limit of loan available under the
scheme :
Levels of funding under PMEGP
Categories of
Rate of subsidy
beneficiaries Owner’s
(of cost of
under contribution
project)
PMEGP
Area Urban Rural
General 10% 15% 25%
Special
(including SC/
STs/ OBCs/
minorities/
women, ex-
05% 25% 35%
servicemen,
physically
handicapped,
hill and border
areas

Note:
The maximum cost of the project/unit admissible
under manufacturing sector is Rs. 25 lakh. (2) the
maximum cost of the project/unit admissible
under business/service sector is Rs. 10 lakh. (3)
the balance amount of the total project cost will be
provided by banks as term loan.

The government subsidy under the scheme will be

routed by KVIC through the identified banks for
eventual distribution to the beneficiaries /
entrepreneurs in their bank accounts. The
implementing agencies, namely KVIC, KVIBS
and DICs will associate reputed non government
organization (NGOs)/reputed autonomous
institutions/self help groups /National Small
Industries Corporation (NSIC) / Udyami Mitras
empanelled under Rajiv Gandhi Udyami Mitra
Yojana (RGUMY), panchayati raj institutions and
other relevant bodies in the implementation of the
scheme, especially in the area of identification of
beneficiaries, of area specific viable projects, and
providing training in entrepreneurship
development.
Eligibility :
• Any individual, above 18 years of age
• There will be no income ceiling for assistance
for setting up projects under PMEGP
• For setting up of project costing above Rs.10
lakh in the manufacturing sector and above Rs. 5
lakh in the business /service sector, the
beneficiaries should possess at least 8th standard
pass educational qualification.
• Assistance under the scheme is available only
for new projects sanctioned specifically under the
PMEGP.
• Self help groups (including those belonging to
BPL provided that they have not availed benefits
under any other scheme) are also eligible for
assistance under PMEGP.
• Institutions registered under societies
registration act,1860; production co-operative
societies, and charitable trusts, existing units and
the units that have already availed government
subsidy under any other scheme of government of
India or State Government are not eligible.
How to apply :
The identification of beneficiaries will be done at
the district level by a task force consisting of
representatives from KVIC/state KVIB and state
DICs and banks. The task force would be headed
by the district magistrate / deputy commissioner /
collector concerned. The bankers should be
involved right from the beginning to ensure that
bunching of applications is avoided. However, the
applicants, who have already undergone training
of at least 2 weeks under entrepreneurship
development programme (EDP) / skill
development programme (SDP) / entrepreneurship
cum skill development programme (ESDP) or
vocational training (VT) will be allowed to submit
applications directly to banks.
Self Employment Schemes under West Bengal
Minorities Development & Finance Corporation
(WBMDFC.)
Objective:
West Bengal Minorities Development & Finance
Corporation (WBMDFC.) Offers loan facility to
promising entrepreneurs belonging to the minority
communities (muslims, christans, buddhists, sikhs,
persees) for their financial as well as social
advancements.
Eligibility :
• Beneficiary must be a notified minorities i.e.
Muslim, Christian Buddhist, Sikh and Parsee.
• The annual family income of the beneficiary
must not exceed Rs 40000/- in rural areas and Rs
55000/- in urban areas
• He should not be a defaulter in respect of loan
taken previously from Banks/ Financial
Institutions for similar purpose.
Term loan :
Term loan is given for project cost upto Rs.
1,00,000/- on any need based commercially viable
scheme. For project cost above 1 lakh upto 5 lakh
loan for any scheme can be subject to approval of
National Minorities Development & Finance
Corporation (NMDFC)
Margin Money Scheme :
Project cost up to Rs. 5 lakhs is sanctioned by any
commercial bank and willing to finance 60% of
the project.
West Bengal Minorities Development & Finance
Corporation (WBMDFC) may provide loan up to
25% of the project cost. However this assistance is
subject to a maximum amount of 1.25 lakhs.
The rate of interest will be 4% on receiving
requisition from the sanctioning bank. The
recovery of the loan will also have to be
proportionately shared.
Cluster Loan :
Loan upto Rs 25,000/- is given for any ongoing
scheme and repayable in 23 monthly installments.
Micro Financing :
It provides financial assistance to augment income
generating activities like small business, trade,
tiny/cottage industry, service activity,artisan
activity, agriculture or allied activity, transport
sector activity. The scheme provides credit
through NGOs. The NGOs may finance the
beneficiaries directly or through Self Helf Group.
Quantam of loan is upto Rs 6000/- per individual
for short term (6 to 15 months) and Rs 10000/- for
medium term (2 to 3 years).
How to apply :
When the corporation invites applications, the
candidates may submit applications in the
prescribed format to Panchayat Samity office and
to Sub-Divisional office in rural and Municipal
areas respectively. In Kolkata to the GM, DIC
Kolkata. For further details, the corporate office of
the WBMDFC. may be contacted at the following
address:
Swarna-Jayanti Sahari Rojgar Yojana (SJSRY)
Objective:
The Swarna Jayanti Shahari Rozgar Yojana
(SJSRY) was launched on 01.12.1997 after
subsuming the earlier three schemes for urban
poverty alleviation, namely Nehru Rozgar
Yojana (NRY), Urban Basic Services for the
Poor (UBSP), and Prime Minister's Integrated
Urban Poverty Eradication Programme
(PMIUPEP). The key objective of the Scheme
was to provide gainful employment to the urban
unemployed or underemployed through the
setting up of self-employment ventures or
provision of wage employment. it also provides
supporting skill development and training
programmes to enable the urban poor have
access to employment opportunities opened up
by the market or undertake self-employment;
and the target population under SJSRY is the
urban poor - those living below the poverty line,
as defined by the Planning Commission from
time to time.
Components :
SJSRY will have five major components, namely
(i) Urban Self Employment Programme (USEP)
(ii) Urban Women Self-help Programme
(UWSP)
(iii) Skill Training for Employment Promotion
amongst Urban Poor (STEP-UP)
(iv) Urban Wage Employment Programme
(UWEP)
(v) Urban Community Development Network
(UCDN)
Urban Self Employment Programme (USEP)
:
This Component will be having two sub-
components:
(i) Assistance to individual urban poor
beneficiaries for setting up gainful self-
employment ventures [Loan & Subsidy]
(ii)
Technology/marketing/infrastructure/knowledge
& other support provided to the urban poor in
setting up their enterprises as well as marketing
their products [Technology, Marketing & Other
Support]..
Eligibility :
USEP will target the urban population below
poverty line, as defined by the Planning
Commission from time to time. It will lay special
focus on women, persons belonging to
Scheduled Castes (SC) / Scheduled Tribes (ST),
physically challanged persons and such other
categories as may be indicated by the
Government from time to time. The percentage
of women beneficiaries under USEP shall not be
less than 30%. SCs and STs must be benefited at
least to the extent of the proportion of their
strength in the city / town population below
poverty line (BPL). A special provision of 3%
reservation in the total number of beneficiaries
should be made for the physically challanged
persons under USEP. In view of the Prime
Minister's New 15-Point Programme for the
Welfare of Minorities, 15% of the physical and
financial targets under the Urban Self
Employment Programme at the national level
shall be earmarked for the minority
communities.

No minimum or maximum educational

qualification is prescribed for selection of
beneficiaries under USEP. Where the identified
activity for microenterprise development
requires skill training of an appropriate level, the
same will be provided to the beneficiaries before
extending financial support.
Beneficiary Identification :
A house-to-house survey for identification of
genuine beneficiaries, with focus on slums and
low-income settlements, will need to be
conducted. Model Formats for conduct of slum
survey, household survey and livelihoods survey
and guidelines will be communicated by the
Ministry of Housing & Urban Poverty
Alleviation. In addition to the economic criteria
of the Urban Poverty Line, noneconomic
parameters will also be applied to identify the
urban poor for receiving benefits under SJSRY.
Loan Amount :
The details of financing pattern under USEP are
as follows :
• Maximum allowable unit project cost -
Rs.200,000/-
• Maximum allowable subsidy - 25% of the
Project Cost subject to a maximum of
Rs.50,000/-
• Beneficiary contribution - 5% of the project
cost as margin money
• Collateral - No Collateral required
In case a number of beneficiaries decide to
jointly set up a project, such project shall be
eligible for a subsidy which will be equal to the
total permitted subsidy per person as per the
above criteria. In this case too the provision of
5% margin money per beneficiary will apply.

Skill development through appropriate training is

another element of this programme. It is
intended to provide training in a variety of
service and manufacturing trades as well as local
skills and local crafts so that the beneficiaries
can set up self-employment ventures or secure
salaried employment with higher remuneration.

There is sub-scheme under this scheme called

“development of women and children in urban
areas” which extends special incentives to urban
poor women who decide to set up self-
employment ventures in a group. To be eligible
for subsidy under this scheme the group should
consist of at least 10 urban poor women. The
group society shall be entitled to a subsidy of Rs.
1,25,000/- or 50% of the cost of project,
whichever is less.
Beneficiary Identification :
A house-to-house survey for identification of
genuine beneficiaries, with focus on slums and
low-income settlements, will need to be
conducted. Model Formats for conduct of slum
survey, household survey and livelihoods survey
and guidelines will be communicated by the
Ministry of Housing & Urban Poverty Alleviation.
In addition to the economic criteria of the Urban
Poverty Line, noneconomic parameters will also
be applied to identify the urban poor for receiving
benefits under SJSRY.
Loan Amount :
The details of financing pattern under USEP are as
follows :
• Maximum allowable unit project cost -
Rs.200,000/-
• Maximum allowable subsidy - 25% of the
Project Cost subject to a maximum of Rs.50,000/-
• Beneficiary contribution - 5% of the project cost
as margin money
• Collateral - No Collateral required
In case a number of beneficiaries decide to jointly
set up a project, such project shall be eligible for a
subsidy which will be equal to the total permitted
subsidy per person as per the above criteria. In this
case too the provision of 5% margin money per
beneficiary will apply.
Skill development through appropriate training is
another element of this programme. It is intended
to provide training in a variety of service and
manufacturing trades as well as local skills and
local crafts so that the beneficiaries can set up
self-employment ventures or secure salaried
employment with higher remuneration.

There is sub-scheme under this scheme called

“development of women and children in urban
areas” which extends special incentives to urban
poor women who decide to set up self-
employment ventures in a group. To be eligible
for subsidy under this scheme the group should
consist of at least 10 urban poor women. The
group society shall be entitled to a subsidy of Rs.
1,25,000/- or 50% of the cost of project,
whichever is less.
Urban Self Employment Programme (Loan &
Subsidy) :
This component of SJSRY focuses on providing
assistance to individual urban poor beneficiaries
for setting up gainful self-employment ventures -
micro-enterprises.
Coverage :
The programme will be applicable to all cities and
towns on a whole town basis. Within each town, it
will be implemented by selecting whole clusters of
the poor segments so as to bring in efficiencies in
the administration and the delivery mechanisms
and also make the impact visible.
Funding Pattern :
The details of financing pattern under USEP are as
follows
Maximum allowable unit project cost -
Rs.200,000/-
Maximum allowable subsidy - 25% of the Project
Cost subject to a maximum of Rs. 50,000/-.
Beneficiary contribution - 5% of the project cost
as margin money.
Collateral - No Collateral required.
Urban women self-help programme (UWSP) :
This Component will be having two sub-
components:
(i). Assistance to groups of urban poor women for
setting up gainful self-employment ventures -
UWSP (Loan & Subsidy)
(ii). Revolving Funds for Self-Help Groups
(SHGs) / Thrift & Credit Societies (T&CSs)
formed by the urban poor women – UWSP
(Revolving Fund).
Urban Women Self-Help Programme (Loan &
Subsidy) :
This scheme is distinguished by the special
incentive extended to urban poor women who
decide to set up self-employment ventures in a
group as opposed to individual effort. Groups of
urban poor women may take up an economic
activity suited to their skill, training, aptitude, and
local conditions.
The Urban Wage Employment Programme :
This programme seeks to provide wage
employment to beneficiaries living below poverty
line by utilizing their labour for construction of
socially and economically useful public assets.
This programme applies to urban local bodies the
population of which was less than 5 lakhs as per
1991 census. The prevailing minimum wage rate,
as notified from time to time for each area, shall
be paid to beneficiaries under this programme. No
educational qualification is required for the
scheme.
Urban community development network
(UCDN) - community structures, community
development & empowerment :
SJSRY shall rest on the foundation of community
development and empowerment. Rather than
relying on the traditional method of top-down
implementation, the Scheme shall rely on
establishing and nurturing community
organizations and structures that facilitate
sustained urban poverty alleviation. Towards this
end, community organizations like
Neighbourhood Groups (NHGs), Neighbourhood
Committees (NHCs), and Community
Development Societies (CDSs) shall be set up in
the target areas.
Swarna-Jayanti Gram Swarojgar Yojana (SGSY)
Objective:
The main objective of the SGSY is to bring the
assisted poor families above the poverty line in
three years by providing them income generating
assets through a mix of bank credit and
government subsidy. The scheme covers various
aspects of self-employment such as organization
of the poor into a self-help group, training, credit,
technology, infrastructure and marketing.
Salient features of the scheme :
• The assisted families may be individual or
group, however, emphasis is on the group
approach. Generally the groups are formed with
the members of BPLfamilies only. In some cases
20% and in exceptional cases 30% of the group
members may belong to APLfamilies, but the
APL members of the groups are far from being
office bearer and will not be entitled to get
subsidy.
• 50% of the group formed in each block should
be exclusively for women who will account for at
least 40% of the swarozgaries.
• For selection of key activities, approval of the
panchayat samity at the block level and DRD cell
zilla parishad at district level are necessary.
• The scheme ensures upgradation of technology
in the identified activity cluster. The technology
intervention seeks to add value to the local
resources, including processing of the locally
available material for local and non-local market.
• SGSY provides for promotion of marketing of
the goods produced by the swarozgaries.
• SC/ST accounts for at least 15%m of the
swarozgaries and disabled for 3%..
Subsidy Norms for SHGs and Disabled persons
:
Subsidy under SGSY is uniform @30% of the
project cost, subject to a maximum of Rs. 7,500/-
in case of individual beneficiaries. In case of
SC/STs and disabled, the rate is 50% subject to a
maximum of Rs. 10,000/-. For group of
swarozgaries ,the subsidy is 50% of the project
cost subject to a ceiling of Rs. 10000/- per capita

Expenditure on different component such as

training and capacity building, revolving fund,
 subsidy and infrastructure are to be prioritized by
DRD cell based on the local requirements.
However, the expenditure on infrastructure should
not exceed 20% of total annual allocation.

Special Component Plan (SCP) and Tribal Sub

Plan (TSP)

Strategies of the Scheduled Caste Sub Plan for the

Scheduled Castes (SCs) and Tribal SubPlan for he
Scheduled Tribes (STs) were introduced in the
Sixth Plan and Fifth Plan for channelising to these
categories of people their due share of plan benefits
and outlays. The strategies of Scheduled

Caste Sub Plan (SCSP) and Tribal Sub Plan (TSP)

envisage to channelise the flow of outlays and
benefits from all the sectors of development in the
Annual Plans of States/UTs and Central Ministries
at least in proportion to their population both in
physical and financial terms.
The West Bengal Scheduled Castes and Scheduled
Tribe Development and Finance Corporation has
launched the Special Component Plan (SCP)
scheme for the scheduled caste and Tribal sub Plan
(TSP) scheme for scheduled tribe people living
below the poverty line. The primary object of these
schemes are economic upliftment and augmenting
the income of the poor SC/ST people of West
Bengal through the process of micro financing. The
eligibility criteria for the scheme are:
Beneficiary :
Scheduled caste/ scheduled tribe people on
individual or cluster basis, living below the poverty
line, whose annual family income is Rs. 19654/- for
rural areas and Rs. 27,247/- for urban areas.
Schemes to be financed :
the corporation provides assistance to the target
group people for undertaking income generating
schemes under six broad sectors like : 9i)
agriculture & small irrigation (ii) animal husbandry
(iii) fisheries (iv) village industries (v) business &
(vi) small transport.
Project cost :
The maximum limit of project cost is Rs. 35,000/-
under these medium term lending programme.
Means of finance :
means of finance in these schemes consists of three
components. (a) subsidy, (b) margin money, (c)
bank loan.

Subsidy is restricted to 50% of project cost or Rs

10,000/- whichever is less. Margin money loan is
extended up to the project cost of Rs. 12,000/- @
20% of the project cost or Rs 2,000/- whichever is
less.

The following points highlight the eight

major problems of the Indian economy.
Some of the problems are: 1. Low level of
national income and per capita income 2.
Vast inequalities in income and wealth 3.
Predominance of agriculture 4.
Tremendous population pressure 5.
Massive unemployment and Others.
Indian Economy Problem # 1. Low level of
national income and per capita income:
Economic growth of any country can be
viewed from its level of national income and
per capita income.
It is said that higher the level of national
income, higher is the rate of economic growth.
India’s net national product (NNP) at factor
cost in 2007-08 at 1999-2000 prices stood at
Rs 27,60,325 crore. Population during the time
stood at 1124 million.
This amounts to saying that per capita NNP
came to Rs 24,256 or Rs 2,021 per month.
Standards of living of masses are miserably
low. Even the basic necessities are beyond the
means of the majority of population.
Comparing India’s per capita income with the
other countries of the world, one comes to the
conclusion that India is one of the poorest
nations of the world.
Indian Economy Problem # 2. Vast
inequalities in income and wealth:
Not only per capita income is low, but Indian
economy is also marked by great inequalities
in the distribution of income and wealth. In
India, as years roll on, inequalities are on the
rise. The logical corollary of this inequality is
mass poverty. Nearly 60 p.c. of the total
population share one-third of India’s national
income while only rich 5 p.c. of the total
population enjoy the same amount of national
income.
This inequality widens the problem of poverty.
Even in 1972-73, more than 50 p.c. of the total
population lived below the poverty line.
Thanks to some economic progress it has
come down from 36 p.c. in 1993-94 to about
27.5 p.c. in 2004- 05, poverty estimate based
on Uniform Recall Period. In short, Indian
economy still reels under the vicious circle of
poverty.
Indian Economy Problem # 3. Predominance
of agriculture:
Less developed countries live mainly upon
agriculture and extractive industries, like
mining, fisheries and forests. Predominance of
agriculture is explained from the viewpoint of
sectoral composition of national income and
occupational pattern.
In India, in 1950- 51, more than 55 p.c. of our
GDP came from the agricultural sector or the
so- called primary sector. In 2007-08,
however, the contribution of this sector toward
GDP came down to 19.4 p.c.
The contributions of the secondary and tertiary
sectors were 24.9 p.c. and 55.7 p.c.,
respectively. Thus, even after 58 years of
planning, agriculture alone contributes less
than one-fifth of our national income.
Occupational structure also tells a story of
predominance of the agricultural sector and
the backwardness of the industrial sector.
In India, 52 p.c. of the total population was
engaged in agriculture in 2004-05. Though
agriculture occupies a predominant position in
India, it is still backward.
Indian Economy Problem # 4. Tremendous
population pressure:
In LDCs, the rate of growth of population is
very high. So far as the size of population is
concerned, India ranks second next only to
China (1312 million in 2006). India’s
population is now 1110 million in 2006- 07.
During the decade of 1991, the growth rate of
population in India was 1.61 p.c. per annum,
as compared to 0.7 p.c. growth rate of
population of developed countries.
High birth rate (23.5 per 1000) coupled with
low death rate (7.5. per 1000 in 2005-06) is
the genuine cause for population explosion in
India. In the 20th century, India’s population
went up by 5 p.c. as against 3 p.c. increase in
the world’s population as a whole.
Indian Economy Problem # 5. Massive
unemployment:
In LDCs, not only natural resources are under-
utilised but also a massive wastage occurs in
the case of manpower resources. Slow
economic growth rate on the one hand, and
rapid growth of population on the other hand,
has accentuated the problem of unemployment
in India.
Between 1971 and 1999, the number of
unemployed in India increased by 10 times
though the number of job-seekers increased by
2.5 p.c. annually; but the employment
possibilities increased by a modest rate of 1.8
p.c. Number of registered job-seekers in 2006-
07 stood at 40.7 million. Unemployment rate
has been rising persistently since the days of
economic reforms began. It rose from 1.96 p.c.
in 1993-94 to 2.39 p.c. in 2004-05.
However, employment growth in 2004- 05
that stood at 2.89 compared to 0.98 p.c. in
1999-2000 is an encouraging development.
But employment growth in recent decades is
not commensurate with the labour force
growth rate. What we experience now is the
‘jobless growth’.
The rate of growth of employment in the
organised sector came to a negative of 0.31
p.c. during 1994-2005 as compared to 1.20
p.c. in 1983-1994. Some people call it ‘job
loss growth’.
Not only this, Indian agriculture exhibits a
considerable amount of underemployment and
disguised unemployment. In the urban areas
also, we find disguised unemployment. It is
somewhat tragic as well as paradoxical that,
despite massive investment made during the
plan period, unemployment problem has
assumed a gigantic proportion. This amounts
to huge wastage of human capital.
Indian Economy Problem # 6. Scarcity of
capital and low rate of capital formation:
As people in LDCs are poor, their capacity to
save is low. This results in a low rate of capital
formation. That is why development
economists suggest that to break the vicious
circle of poverty it is necessary to push up the
rate of investment. Since India is a capital-
poor country, capital per head is low. This
scarcity of capital causes overall back-
wardness of the Indian economy.
In 1950-51, net savings and net investments
stood at slightly more than 6 p.c. and these
two increased to 14.8 p.c. and 16 p.c.,
respectively in 2001-02. The position,
however, in recent times has improved a lot.
These two figures increased to 27.1 p.c. and
28.4 p.c. of NDP in 2006-07. This is an
encouraging development for the Indian
economy.
Along with the low volume of physical
capital, human capital formation is also low.
As per 2001 Census, 34.62 p.c. of the total
population at that time was illiterate. The
literacy rate has gone up to about 64.8 p.c. by
2001—of course, by mathematical jugglery.
Mass illiteracy acts as an impediment to
India’s economic development. India has the
dubious distinction of having largest number
of illiterate population (304 million) in the
world. India has an adverse sex ratio with only
933 women per 1,000 men in 2001.
Indian Economy Problem # 7.
Underdeveloped infrastructure:
Being an LDC, India’s infrastructural facilities
or economic and social overheads of capital
are inadequate. It consists of (a) transport and
communications, (b) energy, (c) finance,
housing and insurance, (d) science and
technology, and (e) health, education, etc.
Availability of these infrastructures creates the
conditions for favourable growth. The
superstructure of an economy largely depends
on the availability of infrastructural facilities.
As far as social and economic overheads are
concerned, India is poor. It is indeed true that
her railway and road networks are comparable
to the developed nations. But her demand for
infrastructural facilities and services outpace
their supplies. Per capita energy use (oil
equivalent) of an Indian in 2004 was 531 kg
vis-a-vis USA’s 7,921 kg. Even China’s per
capita energy use was higher (1,242 kg.) than
India’s.
Compared to other countries, India is poor in
information technology. In 2005, the use of
personal computers per 1,000 Indians was as
low as 16 as against 762 per 1,000 US people.
India’s health expenditure as a percentage of
GDP was 1.39 p.c. in 2007-8 over the USA’s
15 p.c. of GDP.
Thus, India’s social infrastructural facilities
are not only inadequate compared to the
needs, but also awfully low compared to
different countries of the world.
Indian Economy Problem # 8. Low level of
technology:
Due to illiteracy, use of advanced or
sophisticated technology is rather an exception
in India. Because of the limited growth of
technological institution, we are forced to use
primitive methods of technology whose
productivity is low.
Though modern industrial sectors employ
advanced technology, village industries still
employ old and hackneyed methods even in
the age of modern science and globalized
world. This is nothing but technological
dualism that persists in LDCs like India. Truly
speaking, low productivity of Indian labour is
explained in terms of low level of technology.
From the above discussion, we can conclude
that all the characteristics of LDCs are found
in India. No doubt, during the planning era,
she has made progress in different directions.
Still, considering the needs of the country, it is
inadequate.
Indian economy is characterised by low per
capita income, widespread poverty, massive
unemployment, gigantic rise in population,
and so on. So, India is an underdeveloped
country. India is one of the poorest nations of
the world. Her position is worse compared to
even some African countries!
 Heritage Academy High School
69, Gopal Banerjee Lane, Howrah

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Hindi
Hindi Path Sanchayan
WBCHSE
Hindi Sahitya ka Itihas
S K Ojha

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Sahitya Charcha
WBCHSE
Bangla Bhasa O Shilpo Sahitya Sanskritir
Itihas WBCHSE

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Mindscape Prose and Poetry
WBCHSE
Question Bank (Ray & Martin)
The Calcutta Publishers

Accountancy
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Accountancy Theory XII (T.S. Grewal)
Sultan
Chand
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Economics XII (Jaydeb Sarkhel)
New Book Syndicate

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Business Studies XII (Prof. A. K. Mukherjee)
Book India

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Computer Application XII (Dr. Anupam
Karmakar) Dey Book Concern
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Chhaya Prakashani
WBCHSE Maths (R. S. Agarwal)
Bharti Bhawan

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