Introduction
Even though the Indian economy has done better than most other emerging nations, some macroeconomic issues have long afflicted the country. Poverty and inequality issues have made India notorious. For quite some time, inflation has been rising, driving up living costs and deteriorating the plight of people below the poverty line. In addition to a consistent reduction in exports compared to imports, investment growth has also slowed over time.
Nonetheless, one of India’s most significant macroeconomic concerns has been the issue of unemployment. Unemployment is defined as the inability of able-bodied, willing-to-work individuals to obtain employment. According to 2016 estimates, 17.6 million people in India are jobless within the entire work force (Chand et al., 2017). Well-educated youth withdrew their applications for the positions of sweepers and peons, displacing people with less education who relied on these positions for a livelihood. Therefore, India’s greatest macroeconomic issue is the development of productive employment.
Root Causes for Macroeconomic Issues in India
It is possible to identify several issues that could be considered root causes of the increasing unemployment rates. India’s economic trajectory demonstrates that the industrial sector grew insufficiently. The agriculture industry lost more workers to the service sector. Thus, productivity grew in the primary and tertiary sectors but not in the secondary industrial sector. Ancient equipment and obsolete technologies have led to very poor industrial productivity and employment levels, consequently decreasing exports.
India is mostly an agricultural economy in which the vast majority of the people are engaged in agriculture. Nonetheless, seasonal and disguised unemployment plague sector employees. This is due to the dearth of viable alternative employment possibilities for these employees. Focusing on the wrong industries at the wrong time has exacerbated the unemployment crisis as a result of poor planning. The lack of practical training as part of the school curriculum is another reason why the majority of Indians are unable to boost their output. The largely theoretical nature of education in that nation has not prepared every Indian for a future dominated by technology.
Lastly and most importantly, information asymmetry is a contributing factor to the severity of the unemployment crisis. On the one hand, this results in unemployment as the educated young search for work at home. Even while relevant occupations exist in the market, the needed persons are not informed of their existence (Mamgain, 2018). In order to provide for their families, educated youth are settling for employment that is considerably below their level of education. This is also a direct result of information asymmetry since people are uninformed of acceptable employment prospects. This, in turn, leaves jobless, the portion of India that lacks the education for high-paying occupations and relies on jobs requiring little education to survive.
State Response to the Issues
The government upped the intake of employees in government jobs. This again means absorption in the tertiary sector of services. The focus was on the dimly lit secondary manufacturing sector through programs like “Make In India.” It is an attempt to increase production in India, where up to 100% FDI has been permitted in most of the 25 sectors that Make In India covers, with exceptions in space, defense, and media (Madhavan & Nithyashree, 2016). This was done with the intention of increasing FDI and creating productive jobs in the manufacturing sector in India. Different jobs suitable for different age groups and different qualifications would thus be created.
“Startup India” has been a similar program, encouraging various start-ups to be born in India (Rani, 2017). Ideas of start-ups that could not be materialized earlier due to lack of funds would now be started with increased investment from countries like Japan. “Skill India” is another program launched by the Modi Government to tackle the problem of lack of training (Pandey & Nema, 2017). The aim is to train Indians in different skills so that they are able to make suitable candidates of themselves for various jobs across the country and abroad.
Impact on Local Economy
However, despite these actions, the effect on employment indexes has not been positive. Some of the strategies have actually had a negative impact and exacerbated unemployment in India. First, the government has yet to meet half of the declared goals for any of these projects. The majority of the promises made by the Modi administration have not been fulfilled. Second, initiatives with strong intentions, such as “Make in India,” failed owing to poor execution. Experts have harshly criticized this initiative, citing fundamental flaws such as the low cost of labor and the high total cost of manufacturing in India. There is no chance that this initiative will be successful until manufacturing in India is more cost-effective than importing. Thirdly, the overnight demonetization technique was more of a shock than a systemic stimulation. The banning of specific denominations of currency and lowering their value to zero has had negative impacts on India’s economy. In the first few months of 2017, after the conclusion of demonetization in 2016, more than one million Indians lost their jobs (Shirley, 2020). Along with the loss of employment, the labor participation rate also declined, making demonetization difficult for the Indian economy as a whole.
Conclusion
India is a country that holds high potential for the global labor market if the youth of the country would be able to be put in productive job positions. There are various aspects of the state economy that led to the current unemployment rates, including the failure of various initiatives and the great demonetization. Therefore, despite the mildly better strengthening of the local economy in comparison to other developing countries. India remains in a dangerous predicament as unemployment figures remain exceptionally high.
References
Madhavan, M., & Nithyashree, M. (2016). Make in India-Foreign Direct Investment and Its Impact on Economic Growth. Research Revolution, 5(3), 36-40, Web.
Chand, K., Tiwari, R., & Phuyal, M. (2017). Economic growth and unemployment rate: An empirical study of Indian economy. Pragati: Journal of Indian Economy, 4(2), 130-137, Web.
Rani, M. A. (2017). Startup India: Opportunities & challenges “Start up India stand up India”. Academicia: An International Multidisciplinary Research Journal, 7(1), 104-113,
Shirley, M. A. J. (2017). Impact of demonetization in India.International Journal of Trend in Research and Development, 17(2017), 20-23, Web.
Mamgain, R. P. (2018). New Forms of Recruitment Processes and Discrimination in Urban Labour Market in India. Journal of social inclusion studies, 4(1), 131-150,
Pandey, A., & Nema, D. K. (2017). Impact of skill India training programme among the youth. International Journal of Multidisciplinary Research and Development, 4(7), 294-299.