Unemployment in India

Summary

This Forum of Free Enterprise booklet gathers three 1971 lectures on unemployment, each reprinted from a separate address, under an editorial introduction that frames unemployment of the illiterate and the highly educated alike as ‘the most pressing problem of the Indian economy today.’ B. K. Nehru argues that employment can only follow from increased production, not from currency expansion or make-work relief; Prof. K. B. Suri analyses the distinct character of rural under-employment and calls for a massive public-works programme to convert idle rural labour into capital; and S. N. Lal concentrates on the educated unemployed, urging a reorientation of the education system toward employment, encouragement of self-employment and small-scale ancillary industry, and vocational guidance. The contributors share a common diagnosis of urgency and a constructive, market-leaning bias, stressing productivity and entrepreneurship over state pension or subsidy schemes.

Essays

The First Priority

By B. K. Nehru

B. K. Nehru, then Governor of Assam, Meghalaya and Nagaland, contends that unemployment reflects low returns from employment and that the first national priority must be increased production. He distinguishes ‘employment’ from genuinely productive ‘gainful employment’, warning that putting people on the payroll without producing goods and services is mere monetary illusion that pushes up prices. Drawing an extended analogy to Lenin’s New Economic Policy after the October Revolution, he argues that ideological objectives must be subordinated to the imperative of production, and that private enterprise and concessions to capital, however unwelcome to socialist theory, were and are necessary to raise output and thereby create real employment.

• Unemployment is fundamentally a problem of insufficient production, not of money or payroll.
• Creating purchasing power without matching output simply raises prices.
• ‘Gainful employment’ must mean productive employment, not work for its own sake.
• Cites Lenin’s New Economic Policy as proof that ideology must yield to the need to increase production.
• Private enterprise and concessions to capital are justified pragmatically by their productive results.

A Massive Programme of Public Works Needed

By K. B. Suri

Prof. K. B. Suri, Reader in Demography at the Indian Institute of Population Studies, Bombay, distinguishes rural from urban unemployment, arguing that the rural problem takes the form of seasonal under-employment and disguised unemployment among the self-employed and family labour rather than open joblessness. He surveys the data difficulties that plague measurement — the Planning Commission’s Western-derived ‘man-year’ estimates, National Sample Survey inconsistencies, and Reserve Bank figures placing the backlog at over 12 million by 1969 — and notes that roughly three-quarters of unemployment is rural. His central proposal, echoing estimates by Dandekar and Rath, is a massive labour-intensive public-works programme (irrigation, roads, market centres, warehousing) to convert idle rural manpower into durable capital, financed by an annual outlay of several hundred crores.

• Rural unemployment is largely seasonal under-employment and disguised unemployment, not open joblessness.
• Roughly three-quarters of India’s unemployment is rural.
• Official measurement is unreliable: Planning Commission man-year estimates, NSS inconsistencies, RBI’s 12.6 million figure for 1969.
• Proposes a large labour-intensive public-works programme to turn idle rural labour into capital.
• Cites Dandekar and Rath’s estimate that public works could supply Rs. 822 crores of supplemental income.

The Problem of Educated Unemployed

By S. N. Lal

S. N. Lal, Director of E.I.D. Parry Ltd., Madras and Chairman of the Employers Federation of Southern India, addresses the educated unemployed, whom he calls the most serious aspect of the wider problem because it breeds acute social and political pressures — citing West Bengal, the Naxalite movement and recent violence. He projects unemployment rising from about 8.9 lakhs in 1966 to 16.3 lakhs in 1970 among the educated, and argues that relief pensions are no answer: the education system must be reoriented toward employment, vocational guidance expanded, and self-employment and small-scale ancillary industry actively encouraged. Pointing to the Tata, Voltas and Kirloskar networks of ancillary suppliers, the Apprentices Act, the Dantwala and Kothari reports, and Japanese entrepreneurship education, he calls for institutional inducements, in-plant and management training, and a curriculum modernised to meet the requirements of industry.

• Educated unemployment is the most socially dangerous form, feeding unrest such as the Naxalite movement.
• Educated unemployed projected to rise from 8.9 lakhs (1966) to 16.3 lakhs (1970).
• Pensions and subsistence allowances are rejected as solutions; education must be reoriented toward employment.
• Self-employment and small-scale ancillary industry (Tata, Voltas, Kirloskar networks) are key remedies.
• Calls for expanded apprenticeship, vocational guidance, and management training drawing on Japanese and ILO models.

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