{"id":308881,"date":"2024-08-30T20:10:30","date_gmt":"2024-08-30T14:40:30","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=308881"},"modified":"2024-08-30T20:10:30","modified_gmt":"2024-08-30T14:40:30","slug":"mismatch-between-indias-gdp-growth-and-employment-growth","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/mismatch-between-indias-gdp-growth-and-employment-growth\/","title":{"rendered":"Mismatch between India\u2019s GDP growth and employment growth"},"content":{"rendered":"

Source<\/strong>: The post mismatch between India\u2019s GDP growth and employment growth has been created, based on the article \u201cHow to deal with the country’s growth-employment paradox\u201d<\/strong> published in \u201cLive Mint<\/strong>\u201d on 30th August 2024<\/p>\n

UPSC Syllabus Topic: <\/strong>GS Paper 3 – Indian Economy – Employment<\/p>\n

Context<\/strong>: The article discusses India’s economic growth and the mismatch between GDP growth and employment growth. It suggests policies to encourage labor-intensive sectors by adjusting the wage-rental ratio and addressing labor market rigidities to improve employment opportunities.<\/p>\n

For detailed information on India\u2019s Economic Growth and challenges<\/strong> read this article here<\/a><\/p>\n

What is the current state of India’s economic growth and employment?<\/strong><\/h2>\n
    \n
  1. India’s GDP grew by 6.5-7% annually between 2011-12 and 2022-23, but employment only increased by 1.9% per year.<\/li>\n
  2. Unemployment rose from around 10 million in 2011-12 to over 19 million in 2022-23.<\/li>\n
  3. Low wages persist, with regular employees earning about \u20b91,000 per month and casual laborers \u20b94,500.<\/li>\n
  4. Labor-intensive sectors, like construction and textiles, employ around 240 million people.<\/li>\n<\/ol>\n

    What are the structural challenges in India\u2019s labor market?<\/p>\n

    How Can We Make Economic Growth More Labor-Intensive?<\/strong><\/h2>\n
      \n
    1. Adjust Wage-Rental Ratio<\/strong>: Lowering this ratio can make labor-intensive sectors like construction and textiles more profitable, encouraging investment. For example, these sectors already employ around 240 million people.<\/li>\n
    2. Employment-Linked Incentives: <\/strong>Implement a robust employment-linked incentive (ELI) scheme, like the Production-Linked Incentive (PLI), to promote job creation in labor-intensive sectors.<\/li>\n
    3. Address Labor Market Rigidities<\/strong>: Simplify labor laws and reduce the compliance burden, which currently hinders employment growth, by drawing on comparative evidence from different states.<\/li>\n
    4. Adjusting exchange rates to make imports more expensive and exports cheaper, though this could lead to accusations of currency manipulation.<\/li>\n<\/ol>\n

      What are the Challenges with Wages and Capital Costs?<\/strong><\/h2>\n
        \n
      1. Low Wage Levels<\/strong>: The wages in India are extremely low, with regular employees earning about \u20b91,000 monthly, casual laborers earning \u20b94,500 monthly, and self-employed individuals making around \u20b97,000 monthly in 2022-23. These figures highlight the overall depressed wage scenario across various employment forms.<\/li>\n
      2. Controlled Capital Costs<\/strong>: Capital costs are indirectly controlled by the government’s dominant borrowing and lending practices. For instance, the yield on 10-year government securities has remained stable at 7-7.5%, and the real interest cost of capital is around 2%, which is relatively low and sometimes negative, not reflecting the true scarcity of capital.<\/li>\n<\/ol>\n

        Question for practice:<\/strong><\/p>\n

        Discuss the policies and measures that can be implemented to make India’s economic growth more labor-intensive, considering the current challenges in wage levels and capital costs.<\/p>\n","protected":false},"excerpt":{"rendered":"

        Source: The post mismatch between India\u2019s GDP growth and employment growth has been created, based on the article \u201cHow to deal with the country’s growth-employment paradox\u201d published in \u201cLive Mint\u201d on 30th August 2024 UPSC Syllabus Topic: GS Paper 3 – Indian Economy – Employment Context: The article discusses India’s economic growth and the mismatch… Continue reading Mismatch between India\u2019s GDP growth and employment growth<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,167],"tags":[216,8184,10501],"class_list":["post-308881","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-economy-subject","tag-gs-paper-3","tag-indian-economy","tag-live-mint","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/308881","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=308881"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/308881\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=308881"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=308881"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=308881"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}