NCERT Summary: Sectors of the Indian Economy- 2

How to Create More Employment?

There continues to be considerable underemployment in agriculture and a substantial number of people who are not employed at all. Employment can be increased by improving access to productive resources, investing in infrastructure, expanding services, and providing targeted support to producers and workers. The following examples illustrate how employment can be created and sustained.

Irrigation and Crop Diversification: the case of 

Laxmi

Consider Laxmi, who owns two hectares of unirrigated land. If a well is constructed for her family-paid for either by government expenditure or by a bank loan-she can irrigate her land and raise a second crop in the rabi season. Suppose one hectare of wheat provides employment to two people for 50 days (including sowing, watering, fertiliser application and harvesting). If Laxmi can take a second crop, two more family members can be employed on her land. If a new dam and canal network is constructed to irrigate many such farms, the agricultural sector itself can generate substantial additional employment and reduce underemployment.

Transport, Storage and Market Access

If farmers like Laxmi produce much more, they need ways to market and transport the surplus. Investment in rural roads, transport services, warehouses and cold storage helps farmers reach markets and obtain better prices. Improved transport and storage create productive employment not only for farmers but also for people working in transport, trade and warehousing services.

Credit, Inputs and Farm Services

Many small and poor farmers cannot afford timely seeds, fertilisers, pumpsets and agricultural equipment. Without timely credit they borrow from moneylenders at very high interest rates. Availability of cheap and timely agricultural credit from formal banks enables farmers to buy inputs when required, increasing production and employment. Thus, along with irrigation and infrastructure, affordable credit and input supply are essential for raising farm productivity and employment.

Rural and Semi-rural Industries and Services

Employment can also be created by locating industries and services in semi-rural areas where many people live. Examples include dal mills for pulses such as arhar and chickpea, cold storages for potatoes and onions, honey collection centres in forest-fringe villages, and small food processing units for potato, sweet potato, rice, wheat, tomato and fruits. These enterprises provide local employment in processing, storage, transport and trade, reducing migration pressure on large urban centres.

Employment in Education and Health

There are large employment opportunities in social sectors. India has about 200 million children in the school-going age group; only about two-thirds attend school. If all these children were to be enrolled, more school buildings, teachers and support staff would be required. A study by the Planning Commission estimated that nearly 20 lakh (2 million) jobs could be created in the education sector alone. Similarly, expanding health services in rural areas requires many more doctors, nurses and health workers. Investment in these sectors creates jobs while addressing important aspects of development.

Tourism and Regional Specialisations

Each state or region has specific potential for income and employment-tourism, handicrafts, regional food processing, IT-enabled services and so on. Developing these sectors with proper planning and government support can create large numbers of jobs. The same Planning Commission study noted that an improved tourism sector could potentially generate more than 35 lakh additional jobs every year.

Short-term Measures: National Rural Employment Guarantee

Some measures take a long time to implement; others are needed in the short term. To provide immediate employment, the Central Government enacted the National Rural Employment Guarantee Act 2005 (NREGA 2005), also referred to as the Right to Work in the implementing districts. Under this Act, all those who are able to work and are in need of work are guaranteed 100 days of wage employment in a year by the government. If the government fails to provide employment, it must pay an unemployment allowance. Work under the Act gives preference to projects that increase land productivity and long-term rural employment (for example, watershed development, soil conservation, irrigation and afforestation).

Division of Sectors as Organised and Unorganised

Another way of classifying economic activities is by the conditions of employment and the extent to which rules and regulations are followed. This classification distinguishes the organised sector from the unorganised sector.

Organised sector

The organised sector comprises enterprises or places of work where terms of employment are regular and people have assured work. These units are registered with government authorities and must follow laws and regulations such as the Factories Act, Minimum Wages Act, Payment of Gratuity Act and the Shops and Establishments Act. The sector is called organised because it follows formal procedures and has legal obligations.

Workers in the organised sector typically enjoy security of employment, fixed working hours, overtime pay, paid leave, payment during holidays, provident fund, gratuity, medical benefits and, in some cases, pensions. Employers are legally required to provide safe working conditions, drinking water and other facilities in factories and formal workplaces.

Unorganised sector

The unorganised sector is characterised by small and scattered units that largely operate outside strict government control. Although rules exist, compliance is weak. Jobs in this sector are often low paid, irregular and insecure. There is usually no overtime pay, paid leave, holiday pay or social security. Employers can dismiss workers without formal procedures; seasonal fluctuations often lead to temporary layoffs. The unorganised sector also includes many own-account workers-street vendors, repair workers, small artisans and marginal farmers who hire labour as needed.

Why protection for unorganised workers is necessary

•  The organised sector is the most sought-after for workers, but it has been expanding slowly. 
•  Some organised enterprises also adopt informal practices to evade taxes and labour laws, pushing workers into unorganised jobs with low, irregular earnings and no benefits. 
•  Since the 1990s, workers displaced from the organised sector have often taken up unorganised work. 
•  In rural areas, the unorganised sector includes landless agricultural labourers, small and marginal farmers, sharecroppers and artisans such as weavers, blacksmiths, carpenters and goldsmiths. 
•  Nearly 80 per cent of rural households in India are classified as small and marginal farmers. These groups need timely access to seeds, fertilisers, credit, storage and marketing outlets. 
•  In urban areas, the unorganised sector includes small-scale industries, casual construction workers, transport and trade casuals, street vendors, head-load workers, garment makers and waste collectors (rag pickers). 
•  Small-scale units need government support for raw material procurement and marketing; casual workers need protection through minimum wages, social security and access to services. 
•  Workers from Scheduled Castes, Scheduled Tribes and other socially disadvantaged communities are disproportionately represented in the unorganised sector and often face social discrimination in addition to economic insecurity. 
•  Protection and support for unorganised workers are therefore necessary for both economic inclusion and social justice. 

Sectors in Terms of Ownership: Public and Private Sectors

Another classification is based on ownership of assets and responsibility for delivery of services. The public sector refers to activities where the government owns most assets and provides essential services. The private sector consists of activities owned and operated by private individuals or companies for profit. Examples of public sector services include railways and the postal service. Examples of private firms are TISCO (Tata Iron and Steel Company Limited) and RIL (Reliance Industries Limited).

Why the government spends on certain activities

• Private firms supply goods and services when it is profitable to do so. However, there are activities that the private sector may not provide at an affordable cost or at the required scale. 
•  These activities often require very large investments-roads, bridges, railways, ports, power generation, and major irrigation works-that are beyond the capacity of individual private firms or where user fees would make access unaffordable for many people. 
•  The government undertakes such expenditures so that these facilities are available to everyone. 
•  In some cases, the government supports activities because the private sector will not continue production without encouragement. 
•  For instance, selling electricity at the true cost of generation could raise production costs for many industries, forcing small units to shut down. 
•  The government may therefore supply electricity at subsidised rates or bear part of the cost to keep industries viable. 
•  Similarly, the government procures wheat and rice from farmers at a fair price, stores it in godowns, and sells it at lower prices through ration shops to protect both producers and consumers; the government bears the fiscal burden involved. 

Public responsibility for social services and human development

• Certain services are primarily the responsibility of the government.
• Providing universal health care and education-especially elementary education-is a core public duty.
• India has one of the largest illiterate populations in the world.
• Malnutrition and poor child health are major challenges: nearly half of India's children are malnourished and a quarter are severely malnourished.
• The infant mortality rates reported in some states (for example, Orissa - 87 and Madhya Pradesh - 85 in the data cited) are higher than in many poor regions globally.
• Government attention is therefore required for safe drinking water, housing for the poor, food and nutrition programmes, and targeted spending for historically neglected regions.