It is telling that unemployment has failed to emerge as a key issue during the entire Indian parliamentary election campaign that is now virtually over.
On the other hand, jobless growth is a key issue in the US presidential campaign that is currently running. Well-known statistics amply illustrate that the problem of jobless growth is hugely serious in India. During 1992/93-2000/01 the Indian economy grew by an average of 6.1 per cent per annum, up from 5.6 per cent during 1981/82-1990/91.
On the other hand, both the level of unemployment and the total number of unemployed rose between 1993-94 and 1999-2000.
According to the findings of two successive rounds of the National Sample Survey, the rate of unemployment rose from 5.99 per cent to 7.32 per cent, and the total number of unemployed rose from 20.13 million to 26.58 million.
The serious part of this development is that the economic reforms which began in 1991 and delivered on economic growth, have not delivered on creating new jobs.
In the entire public discussion on the need for reforms, there is little mention that the reform packages advocated may not address the problem of reducing employment elasticity of growth witnessed in India during the latter part of the 1990s. This was not so initially.
Pravin Visaria wrote in a 1998 study that the results of the 1993-94 NSS survey, the first since economic reforms began, "suggest that the level of employment has not been adversely affected by the reforms. This seems true of not only the urban areas but also of the rural areas."
It is poignant that a later study Twenty-first Century India (OUP, 2004), of which Pravin Visaria was one of the principal architects until his sudden demise, notes in its chapter on employment (by Kirsty McNay and others) that "economic growth by itself is not the answer to India's future employment scenario". And what is this scenario?
'A significant worsening seems inevitable' even if an annual growth rate of 6.5 per cent is assumed. If a more realistic trend rate of 5 per cent is used, then naturally the scenario gets worse. It is not as if growth has nothing to do with more jobs. It does and is a must, but that itself is not enough.
The authors are clear that additionally "policy must ensure that the economic climate becomes more employment friendly."
There are several key reasons why creating new jobs and the right kind of jobs is important in itself. Visaria's study Unemployment among youth in India notes that increasingly large numbers of young people are joining the labour force and unemployment is higher among the youth than in the population as a whole.
Considering the social cost of having large numbers of unemployed youth, who are becoming increasingly educated, the matter needs serious and urgent attention.
The other autonomous dimension of the emerging employment scenario, highlighted by the full-length 2004 study, is that female participation in the labour force, along with a reducing burden of child bearing indicated by falling fertility rates, will increase, leading to a worsening of the employment scenario.
So if you want a society in which women want to increasingly exercise their independence and right to work then better do something about growing more jobs.
The villain of the piece in the period after 1993-94, visited by several years of poor monsoons, is of course agriculture (it accounts for 56 per cent of total employment).
During the 1993-2000 period, the annual growth of employment in agriculture was a negligible 0.2 per cent. The elasticity of employment in agriculture was zero. During the same period, services and construction did wonderfully.
These two together recorded an annual jobs growth of 2.76 per cent, more than twice the overall growth of 1.07 per cent. If you take out community, social and personal services, the job growth is even better, 5.52 per cent a year.
What is the minimum that needs to be done? Around 8 million Indians are joining the labour force every year. So at least that number of jobs have to be added every year for the situation not to worsen.
But during the 1993-2000 period that we are considering, only an average of 3.6 million new jobs have been added every year.
The government's task force on employment has worked out an action plan to add 20 million additional jobs during the Tenth Plan, that is, an average of 4 million a year. This brings us to 7.6 million, which is short of 8 million new jobs needed for the situation not to get worse every year.
So what should we do? It is inadvisable to give up on agriculture. Considering the state of affairs in the agricultural sector in UP and Bihar, there is considerable scope for increasing agricultural productivity and creating more jobs there.
What is more, the real opportunity lies in ancillary activities in the countryside like dairying, floriculture, horticulture and food processing. This is where the government comes in. It has to take the lead in providing crucial, hitherto missing, rural infrastructure in areas like roads (to help marketing) power and safe drinking water.
In services, the potential for software and BPO is well known. To that can be added retailing, hospitality (hotels and restaurants), transport, storage, communications and financial services.
All these sectors have done very well in job creation (5 per cent or more) during the period we are looking at. But another area which has recorded negative jobs growth (community, social and personal services) has lots of potential. The country needs very many more teachers and paramedics.
If growth gives the resources to employ them then there are more jobs on the horizon. There is great scope for creating informal employment among women by making available micro credit. But the ultimate enabler is education and vocational skills. Any investment in these is bound to pay more than handsome dividends in terms of jobs.
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