Jobless Growth and Structural Unemployment in India
Indian Economy
- PYQs5
- Articles1
Background
Essential for understanding the nature of India's economic development, challenges in achieving inclusive growth, the role of technology in shaping labor markets, and the need for appropriate industrial and labor policies to address long-term unemployment.
Jobless growth describes an economic phenomenon where GDP expands without a proportional increase in employment opportunities, often due to technological advancements, automation, and a shift towards capital-intensive production methods. This leads to structural unemployment, where available jobs do not match the skills or numbers of the workforce.
Facts & tables
- Capital-intensive investments
- Recent investments in sectors like semiconductors and advanced manufacturing are capital-intensive, not labor-intensive.
- Automation in manufacturing
- Automation, robotics, and Industry 4.0 systems reduce the need for human labor in supervisory and operational roles.
- Disproportionate job creation
- Large investments do not necessarily translate into proportionate job creation, leading to employment growth not matching economic growth.
- Impact on traditional roles
- Digital manufacturing systems require fewer workers and supervisors than before, even as output expands.
| Type | Reference |
|---|---|
| Conceptual area | Indian Economy |
| Conceptual area | Industrial Policy |
Prelims angle
Prelims angle: Conceptual understanding
Prelims angle: Cause and effect relationships
- Economic growth without proportional job creation.
- Driven by capital-intensive investments.
- Automation and Industry 4.0 reduce labor demand.
- Impacts manufacturing and new tech sectors.
- Challenges inclusive growth and demographic dividend.
| Year | Framing tags |
|---|---|
| 2021 | Multi-statement analysis, Conceptual understanding |
| 2018 | Conceptual understanding, Terminology-based question |
| 2015 | Conceptual understanding, Cause and effect relationships |
| 2015 | Statement-based questions, Factual recall |
| 2013 | Conceptual understanding, Cause and effect relationships |
Timeline
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Indian Economy
Conceptual area
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Industrial Policy
Conceptual area
-
Prelims 2013
Conceptual understanding, Cause and effect relationships
-
Prelims 2015
Conceptual understanding, Cause and effect relationships
-
Prelims 2015
Statement-based questions, Factual recall
-
Prelims 2018
Conceptual understanding, Terminology-based question
-
Prelims 2021
Multi-statement analysis, Conceptual understanding
-
Is India producing more graduates than what the economy can absorb?
India's economic growth is increasingly characterized by capital-intensive investments and automation, leading to 'jobless growth' and structural unemployment, particularly in manufacturing and new technology sectors, challenging the absorption of its large workforce.
See also
Past papers
2013–2018 · 3 questions
In the news
Is India producing more graduates than what the economy can absorb?
India's economic growth is increasingly characterized by capital-intensive investments and automation, leading to 'jobless growth' and structural unemployment, particularly in manufacturing and new technology sectors, challenging the absorption of its large workforce.
Try these PYQs
Economic growth in country X will necessarily have to occur if
* Internally capital formation takes place when a country does not spend all its current income on consumption, but saves a part of it and uses it for investment to increase further production. This act of saving and investment is described as capital accumulation or capital formation. * Capital formation refers to investments in physical and human capital, such as building new factories, improving infrastructure, and educating the workforce. Increased capital allows for greater production and innovation.
A decrease in tax to GDP ratio of a country indicates which of the following?
1. Slowing economic growth rates
2. Less equitable distribution of national income
Choose the correct code:
A decrease in the tax-to-GDP ratio of a country can potentially indicate 1 only (Slowing economic growth rates). Tax to GDP Ratio: This ratio represents the total tax revenue collected by a government as a percentage of the country's GDP. It's a measure of the government's ability to raise funds through taxes. Impact of Decrease: A decrease in this ratio can have several interpretations, but it doesn't necessarily point towards a less equitable income distribution (option 2). Slowing Growth: It might indicate a slowdown in economic growth. During economic downturns, businesses and individuals tend to earn less, leading to lower tax collections. Change in Tax Policy: It could also reflect a deliberate change in tax policy, such as tax cuts or exemptions, aimed at stimulating economic activity. Inefficiency: In some cases, it might suggest inefficiencies in tax collection.
Increase in absolute and per capita real GNP do not connote a higher level of economic development, if -
Economic Growth vs. Economic Development: An increase in absolute and per capita real GNP signifies economic growth, which means the overall production of goods and services in a country is expanding. Economic development is a broader concept that goes beyond just increasing production. It encompasses factors like
1. Improved living standards for citizens
2. Reduction in poverty and unemployment
3. Increased literacy and education levels
4. Improved healthcare and infrastructure If poverty and unemployment are increasing even with economic growth (GNP increase), it suggests the benefits of growth are not being shared widely. This indicates a lack of true economic development.
With reference to the India economy, consider the following statements:
1. The rate of growth of real Gross Domestic Product has steadily increased in the last decade.
2. The Gross Domestic Product at market prices (in rupees) has steadily increased in the last decade
Which of the statements given above is/are correct?
Statement 1 is incorrect: The rate of growth of real Gross Domestic Product has fluctuated over the decade. Statement 2 is correct: The Gross Domestic Product at market prices (in rupees) has steadily increased in the last decade. Thus, statement 1 is incorrect while statement 2 is correct.
With reference to Indian economy, demand pull-inflation can be caused/increased by which of the following?
1. Expansionary policies
2. Fiscal stimulus
3. Inflation-indexing wages
4. Higher - purchasing power
5. Rising interest rates
Select the correct answer using the codes given below.
Expansionary policies: Expansionary policies like increased government spending or lower interest rates can stimulate economic activity and consumer spending. This can lead to excess demand that outstrips supply, causing prices to rise. Fiscal stimulus: Similar to expansionary policies, fiscal stimulus through government spending injections can create an inflationary gap if it's excessive. Higher purchasing power: Higher purchasing power can contribute to demand-pull inflation. If people have more money to spend due to factors like wage increases or wealth accumulation, it can lead to increased demand for goods and services. Inflation-indexing wages: While inflation-indexing wages can contribute to a wage-price spiral in some cases, it's not necessarily a direct cause of demand-pull inflation. It can be a consequence of inflation rather than a primary driver. Rising interest rates: Rising interest rates generally act as a tool to cool down an economy and reduce inflation. They make borrowing more expensive and encourage saving, thereby reducing the money supply and aggregate demand. Therefore, the correct code is 1, 2, and 4.