What are main causes of Unemployment in India?

Problem of unemployment in India is not very grave in comparison to countries like Spain, Greece etc. However, the problem is of Under-employment, whereby people do the jobs worth less than their capacity to do. The growth of Indian Economy has been jobless. Since 1990’s, Indian economic growth is mainly based on manufacturing and services sector. The use of efficient technology in these sectors resulted in low level of employment opportunities creation. The low level of economic growth in primary sector curtailed the job opportunities at rural level. Thus it resulted in jobless growth. Further, rapid population growth adds more labour force to the market. More population means more consumption and less saving, less saving implies less capital formation and less production which finally leads to less employment. Some other reasons are as follows:

Agriculture – A Seasonal Occupation

Being a seasonal activity, agriculture largely offers seasonal employment. Those engaged in farming remain idle for three to four months in a year.

Decline of Small Scale and Cottage Industries

Industrial policy of British government curtailed the growth of small scale and cottage industries. Independent India’s preference to large scale industry and new industrial policy of 1990’s resulted in decline of small scale industries.

Joint Family System

It encourages disguised unemployment. In big families having large business establishments, many such persons are found who do not do any work and depend on the joint income of the family. Joint family system is more prevalent in rural areas; hence a high degree of disguised unemployment there.

System of Education

Prevailing educational system failed to produce trained and efficient labour force capable of self-employment. Country is producing a large number of graduates and post-graduates capable of white collar jobs only. Since the supply of such jobs is less than their demand, unemployment is the obvious outcome.

Mobility of Labour

Labour mobility is very low in India. Because of their family loyalty, people generally avoid migrating to far-off areas of work. Factors like diversity of language, religion and customs also contribute to low mobility. Lower mobility causes greater unemployment.