Indian Economy Part 9 - Concepts of Micro Economics for UPSC / SSC / RBI / RRB / NABARD Video Lecture | Indian Economy for Government Exams (Hindi) - Bank Exams

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hello and welcome to study IQ in the
previous lectures we have learned about
the microeconomics inflation poverty and
this is the fourth module unemployment
modules like poverty unemployment etc
which covers the social issues of India
are very very important from all
examination point of view the upcoming
nabad exam the Arbour exam civil service
preliminary examination everything would
be giving more weightages for social
issues like poverty unemployment etc so
this is a very important module from the
upcoming examinations point of view let
us start when we say about unemployment
we should understand what is employment
first what is meant by employment can we
give a clear definition for employment
we can say that a person is employed or
he has employment if he or she is
working in order to contribute to the
national income of a country so if he or
she works to contribute to the national
income that is - that national income so
we can say that a person is employed if
he or she is working in order to
contribute to the national income so if
a person contributes to the national
income he is employed full employment
this can be said as a situation where
every person who is willing to work
every person who is willing to work is
able to work that is every person who is
willing to work is able to work that
means everyone who is willing to work is
able to find work or is able to work in
order to say that a person is fully
employed he must satisfy two conditions
the first condition is that he or she
should get worked for a specified period
that he or she wants specified time
period that is he should be able to get
work for the specified period for which
he is willing to work and the second
condition is that he should get wages
according to his skills get wages
according to skill if a person finds
only
employment for two or three months in a
year but he is willing to work for the
interior we cannot say that he is fully
employed that means he should be able to
find the work for a specified time
period for hich for which he is willing
to do the work then second one he should
get the wages or skill he has so if a
person if an MBA graduate earns only six
thousand rupees per month and that wages
is not in proportion to his skills we
cannot say that he is fully employed so
these are the two conditions in order to
satisfy full employment in the economy
so first condition he should be able to
find work for a specified period for
which he is willing to do the work and
the second one you should be able to get
the wages according to her skills so if
either of these two conditions that is
first one specific time period and
second one wages according to the skills
so if any of these two conditions are
not satisfied we call it as
underemployment so full employment means
two of this conditions should be
satisfied if any of these two conditions
are not satisfied we call that
conditioners under employment in the
economy
what is unemployment then unemployment
means in an economy people are willing
to do the work but they are not able to
find the work willing but not able to
find the work this condition is known as
unemployment in the economy now let us
see what are the types of unemployment
in an economy types of unemployment the
first type of unemployment is frictional
or functional unemployment frictional or
functional unemployment this type of
unemployment is mostly voluntary and
temporary so what is functional or
frictional unemployment it is a time gap
between leaving one job and finding
another one so it is that time gap
between leaving a job leaving a job and
finding another so this time lag can
before acquiring new skills so would be
for acquiring new skills so this is a
desire
type of unemployment in the economy that
is acquiring new skills and finding new
prospects so this is desirable in the
economy this is desirable and this is
good for the personal growth of the
individual good for the personal growth
as well as foreign economy's growth when
the person acquires new skills he will
be able to find better work where better
wages so that will add on to the
national income of the country so it is
good for the economy also for the person
also it is good and for the economy also
it is good so functional or frictional
unemployment is desirable in an economy
next is structural unemployment
structural unemployment structural
unemployment is caused due to a mismatch
between the skills required by the
industry and the skills possessed by
individual skills possessed by the
individuals so it is caused due to a
mismatch between skills required by the
industry and the skills possessed by the
individuals an example of structural
unemployment would be decline of
handloom industries handloom industry
because of the technology kill
revolution so another example here we
another example for the structural kind
of unemployment or the mismatch between
the skills required and the skills
processed would be the monetization so
under D monetization so during the
monetization what happened was the
government was insisting individuals for
for promoting a cashless economy or less
cash economy so during the monetization
the government insisted on a less cash
economy so under a less under less cash
economy digitalization was necessary so
under less cash economy digitalization
was necessary and this digitalization
was unaware for many of the Indians so
digitalization was unaware for many of
the Indians so many of the merchants are
like small traders or even the bankers
did not had the hard enough skills for
digitalization
this led to a slowdown in the growth so
this can also be said as
her type of structural unemployment and
even when the concept of less cash
economy comes into existence many people
will be losing job because now most of
the transactions are digitalized so this
can be understood as an example of the
structural unemployment in the economy
next type of unemployment is cyclically
unemployment this is related to the
business cycle in a business cycle there
are boom period also there will be
recession during recession what will
happen during recession the rate of
production or output will come down
because there is a lesser demand in the
economy so production and output will
come down this will lead to lesser
employment this will lead to
unemployment in the economy so recession
can lead to unemployment so this is how
cyclic an unemployment occurs in an
economy this is related to the business
cycle next is seasonal unemployment
seasonal unemployment seasonal
unemployment is connected to agriculture
this happens due to the seasonal nature
of production in agriculture seasonal
nature of production we will discuss
about the agricultural seasons in the
module agriculture next is an important
type of unemployment that is this guy's
unemployment under this guys the
unemployment large number of labour
forces available labour forces available
and they are able to find our coal so
but what is the problem the problem is
that the marginal productivity of this
labour force is zero
marginal productivity is zero how does
this happen say for example in a farm
there are ten employees or ten laborers
the output is hundred units even if the
number of laborers in the farm goes up
to fifteen or twenty still the output
will remain hundred units that means the
marginal productivity of the farmers
zero so even if the number of employees
are the laborers in the farm increases
the marginal productivity remains zero
or the output remains the same in this
case we call it as disguised
unemployment so under disguise
employment people are able to find the
work but they will not add to the GDP or
not to the productivity what can be the
solutions for disguised unemployment
disguised unemployment can be solved by
providing key by providing skill to the
laborers so skill development programs
programs need to be implemented so that
they have skilled they are able to find
new work and this new work would provide
them with more productivity more wages
so skill development programs are
necessary in an economy and especially
in an economy like India where we have a
good demographic dividend skill
development programs are very very
important and skill development programs
can be important from any examination
point of view also we will discuss this
later in detail now let us see what are
the methods to measure the unemployment
or employment rate in an economy so
measurement of employment or
unemployment rate measurement the first
one is labour force participation rate
LF P our labor force participation rate
what is a labor force labor force in an
economy is the part of population which
is willing which is willing and able to
work willing and able to work willing
and able to work the part of the
population in an economy which is
willing and able to work so willing also
able to work that is the labor force the
labor force participation rate LFP are
equal to the labor force divided by
total population in 200 so here
the labor force is the part of
population which is able to work and
also willing to work labor force divided
by the total population in an economy in
200 will give you labor force
participation rate next is a worker
population ratio worker population ratio
the worker population ratio is the
number of employed persons employed
persons
divided by
total population in 200 the number of
employed persons divided by the total
population in 200 will give you worker
population ratio next is the
unemployment rate unemployment
unemployment rate is the number of
unemployed persons divided by the labor
force in 200 number of unemployed
persons divided by the labor force into
hand will give you the unemployment rate
so here the labor forces the part of the
population which is willing to work and
able to work now let us see what is the
occupational structure in India this is
very important from any examination
point of view you must clearly
understand what are the sectors of the
Indian economy what is the contribution
of each sector to the GDP the
contribution of each sector to the
employment rate in the economy is it
increasing or decreasing what are the
trends in the growth in employment or
growth in the GDP you must clearly
understand all these concepts in order
to answer questions in the examinations
so this is a very important topic so let
us see what is the occupational
structure in India occupational
structure in India in India we have
primarily three sectors in the economy
which we will discuss in detail later
the three sectors in the Indian economy
are agriculture industry and the
services sector sectors share an
employment share in GDP around 50
percentage of Indian population is
directly engaged in agriculture and
allied activities but the contribution
of agriculture to the GDP is merely 14
percentage the contribution of industry
in the share of employment is around 14
to 15 percentage industry contributes
around 21 percentage of India's GDP
services sector provides 34 to 35
percentage of employment in the Indian
economy and contributes to 65 percentage
of the GDP in India now let us analyze
this data coming to the agriculture
agriculture
sector contributes to around 14
percentage of the GDP but it engages
around 50 percentage of India's
workforce we can see a mismatch here
mismatch between the share of employment
and the contribution to the GDP what is
the reason for this mismatch the reasons
could be the lack of technology pact of
productivity disguise the unemployment
and many other reasons which we will
discuss in detail in agriculture module
but here the question is is this
mismatch desirable in an economy that is
the mismatch between the contribution to
the GDP and share in employment not at
all this is not at all desirable in an
economy the government should take
measures to rectify this mismatch coming
to the industrial sector industry sector
contributes around 21 percentage in GDP
and provides employment for the 14 to 15
percentage of the total workforce there
is no greater mismatch in industry so
coming to the services sector services
sector contributes to 65 percentage of
the GDP but contributes only to 34 35
percentage of the number of workers
organ employment employees or the labor
force here also we will see a mismatch
between the share in employment and the
contribution to the GDP of the economy
in an economy if a sector contributes
more to the GDP it should be able to
contribute more to the percentage of
employment it creates also so here also
we will see a greater mismatch so these
two mismatches must be rectified in an
economy if the economy has to grow in
full potential occupational structure in
India is a very important topic and
questions can be asked from this related
topics it can be either an objective
type even in descriptive type questions
you can add points from the occupational
structure of India now let us analyze
the pre LPG era and post LPG era growth
rate of employment GDP growth let's see
what is the LPG era that is
liberalisation privatization and
globalization the post reforms and the
pre reforms era so in the pre reforms
era we will see that the average growth
rate of employment was 2.7 percentage
per annum if we take a few years prior
to the liberalisation privatization and
globalization the average growth rate
was 2.7 percentage per annum in the
employment and the GDP growth on an
average was five point eight percentage
according to the seventh five-year plan
so from the eight five-year plan we
began the reforms so from this seventh
five-year plan data we understand that
the growth rate GDP growth rate was five
point eight percentage and the
employment growth rate was two point
seven percentage coming to the post
reform era immediately after the reforms
that is immediately after adopting the
liberalization privatization and
globalization the rate of employment
growth came down to one point zero seven
percentage per annum
but according to the eight five-year
plan reports the rate of GDP growth came
up to 6.8% äj-- see here immediately
before the liberalization privatization
and globalization the growth rate of
employment was two point seven
percentage per annum but the GDP growth
rate was merely five point eight
percentage coming to the period soon
after the adoption of liberalization
privatization and globalization or the
reforms the growth rate in employment
came down to one point zero seven
percentage per annum and the GDP growth
rate increased to six point eight
percentage here you will see that the
growth rate in employment has come down
but the GDP growth has gone up so here
also we will find a mismatch between the
growth rate of employment and the GDP
growth rate
ideally in an economy when
GDP increases it should contribute to
the employment rate or to the growth of
employment in the economy this is the
ideal condition but in India what has
happened the GDP has increased due to
the reforms adopted by the economy but
the rate of employment growth came down
this is a very negative indication and
this situation is known as jobless
growth in an economy jobless growth
jobless growth is very very important
this term is very very burdened from any
examination point of view you must
understand what is jobless growth you
must also understand what are the
reasons what are the solutions and you
must understand the trends in the Indian
economy regarding the jobless growth so
we will discuss the jobless growth in
Indian economy jobless growth the
concept of jobless growth in India came
up after the LPG reforms of 1991 the
reforms of reforms or the new economic
policy adopted by the government after
1991 the idea of jobless growth came
into India jobless growth means that
there is an increased contribution of
the GDP in the economy but there is a
decreased employment growth in the
economy so jobless growth is a situation
where the GDP of the economy is
increasing but there has been a decrease
in the employment rate in the economy
idle in an economy when the GDP grows it
should reduce the unemployment rate
unemployment rate but in case of India
we have seen that it has reduced the
rate of growth in employment ideally it
should reduce the unemployment rate let
us analyse what are the reasons for the
jobless growth in India reasons for
jobless growth in India we are
discussing the reasons from the Indian
context so the first reason for jobless
growth in India was the decrease in the
government expenditure due to the
balance of payment crisis in 1991 the
government reduced the expenditure on
the public the government adopted
contractionary fiscal policies
contractionary fiscal policies so the
contractionary fiscal policies led to
a decrease in the public expenditure by
the government
public expenditure can be for the
creation of jobs or for providing skills
to the labour force etc so when the
government reduced this expenditures
India experienced a jobless growth again
in the year 2004 five in the financial
year 2004 five we will see that the
government increased expenditures on job
creation that is the government provided
for various schemes for the development
of skills for job creation for ms amis
for increasing the production etc during
those period we have seen that the
employment rate in the economy also came
up from this we can conclude that in
India the government expenditure and job
creation employment creation are in
there connected that is when the
government spends more on job creation
there will be more job in the economy or
the employment rate in the economy goes
up and when the expenditure from the
side of the government comes down on job
creation or skill development the
employment way it also comes down so the
economy is highly dependent on the
government expenditure for job creation
in the economy the second reason for
jobless growth in India is that the
growth of the labor force growth of
labor force is more than growth in job
whose labor force labor force is the
part of the population who are willing
to do the work and able to do the work
so the growth of the labor force is more
than the jobs created in the economy
that means that means the supply is more
than the demand so the demand for job is
less in the economy but the supply for
job is more indirect on me this can lead
to unemployment in the economy and
jobless growth in the economy the reason
is the demographic dividend of the
country the inner labor force in the
country is increasing more and more so
the demographic dividend or the working
population in the country is increasing
increasing year by year
is another reason for jobless growth in
India if the demographic dividend of the
country that is a working age population
15 to 40 years is properly utilized the
economy will grow into its full
potential the demographic dividend of a
country is a blessing for a country so
it is a positive aspect for any economy
but proper utilization of this
demographic dividend must be ensured
from the part of the government in order
to ensure proper growth of the economy
for example if we take the examples of
East and East Asian countries East Asian
countries their demographic dividend has
worked as a miracle further growth what
can be done in order to utilize this
demographic dividend of a country the
government should provide education
health skill etc to this working age
population so providing education health
and skills will lead to improved
employment rates in the economy which
will contribute more to the GDP of the
economy the third reason has decrease in
labor force participation labor force
participation it means that lesser
number of people looking for a job
lesser number of people looking for a
job what are the reasons for this the
first reason was higher enrollment rate
the second reason was an increase in the
household income of the individual the
third one was mechanization of
Agriculture but these are not issues of
concern because these are all good for
the economy these are all positive
signals for an economy of them of its
growth so if the labor force
participation comes down because of the
factors like mechanization of
Agriculture or more number of enrolment
in the schools or an increase in the
household income these are positive
signals and not issues of concern for an
economy the next reason for jobless
growth was challenges related to modern
services challenges related to modern
services modern services with the new
economic policy the economy adopted
digitalization information technology
increased mechanization etc the indeed
population we're unfamiliar with all
these things so this also led to jobless
growth in the economy the next reason
for the jobless growth in the economy
was due to the losing of employment from
the traditional services for example
Indian handlooms with the adoption of
modern technology the handloom industry
law lost its relevance so these are the
reasons for jobless growth in an economy
so these are the reasons for the jobless
growth in the Indian economy which we
have discussed now
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