While most remain focussed on the impact of the global crisis on India’s GDP growth, a bigger problem area is likely to be the employment front. Unemployment rates have climbed to around 8.4 per cent at present, from around 7.3 per cent at the turn of the century, and estimates are this could rise yet again — in keeping with global trends. The good news over the past few years has been the rise in elasticity of employment, or the rise in employment for any increase in GDP growth — this rose from 0.15 in 1993-94 to 1999-2000 to 0.48 in 1999-00 to 2004-05. So, any rise in GDP growth generates more employment than before. The flip side, of course, is that if growth slows, as it is likely to, jobs don’t get generated. (Click here for detailed table)
Citigroup’s latest estimates, based on official figures, estimate the total labour force at 483.7 million in 2011-12 and the work force at 460.3 million, giving an unemployment rate of 4.8 per cent. This, however, assumes a total of 58.1 million new jobs will be created in the 11th Plan period. Apart from the fact that this is much higher than the 49 million created in the last Plan period, all of this has to be generated in the industry and services sector — with construction (expected to generate 11.9 million jobs in the 11th Plan as compared to 6.3 million in the 10th) and trade/hotels/restaurants (17.4 million versus 11.2 million) likely to grow slowly for a few years, the number’s unlikely to be achieved. If new jobs in the 11th Plan are the same as those in the 10th Plan, unemployment levels will be 6.7 per cent as compared to the target of 4.8 per cent. And even this could be optimistic.
