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Unemployment in India


Unemployment is a serious problem as it indicates a situation where the total number of job vacancies is much less than the total number of job seekers in the country. Unemployment is a common economic malady faced by each and every country of the world, irrespective of their economic system and the level of development achieved.
India is one of those ill-fated underdeveloped countries which is suffering from a huge unemployment problem.
Nature of Unemployment in India
India is a developing economy, the nature of unemployment therefore sharply differs from the one that prevails in industrially advanced countries. This type of unemployment caused by economic fluctuations did arise in India during the depression in the 1930's which caused untold misery. Similarly, after the Second World War, there was a good deal of frictional unemployment caused by retrenchment in the army, ordnance factories etc. Similarly the process of rationalisation which started in India since 1950, also caused displacement of labour. It would be worthwhile to emphasize here that unemployment in developing economies like India is not the result of deficiency of effective demand in Keynesian sense, but a consequence of shortage of capital equipment or other complementary resources.
Types of Unemployment
1. Functional or Frictional:- It refers to temporary unemployment during the interval period when people change from one job to another.
2. Structural:- It refers to the mismatch between the skill set available with the unemployed and that required by the industries. It occurs mainly due to technological advances or changes in an economy.
3. Cyclical:- It occurs due to cyclical nature of the economy. An economic boom is followed by a depression or recession, when aggregate demand in the economy is not enough to absorb entire production. The production decreases thereby making people unemployed.
4. Seasonal:- It refers to the unemployment occuring due to seasonal nature of agricultural production.
5. Disguised:- It refers to the situation of employing surplus labourers whose marginal product is zero.
Reasons for Poverty
1. Lack of basic human capital like education and health which restricts people to work productively.
2. Rising unemployment and casualisation of workforce.
3. Social and economic exclusion being faced certain sections of society.
4. Lack of physical and social infrastructure.
5. Population pressure in rural areas.

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