Urban and Rural Unemployment in India

Summary

This 1973 Forum of Free Enterprise booklet pairs two diagnostic essays on India’s unemployment crisis from different angles. Dr. M. C. Munshi opens with ‘The Problem of the Educated Unemployed’, a critique of the Five-Year Plans’ failure to generate employment, citing rising registrations at Employment Exchanges, the swelling backlog of unemployed graduates and engineers, and a sociological dimension that has now outgrown a purely economic diagnosis. He surveys a range of state and Centre-sponsored remedial schemes — Bhagwati Committee proposals, State Bank entrepreneur loans, Small-Scale Industries lead programmes — and argues that Chambers of Commerce, on a regional or atomistic basis, should take responsibility for designing and executing relief, including large-scale entrepreneur schemes and trade-union-led Unemployment Insurance. Prof. Pravin Visaria’s companion essay, ‘Rural Unemployment and Underemployment in India’, shifts focus to the 80 per cent of Indians living in villages. Drawing on the National Sample Survey and the 1971 census, he argues that rural India suffers not from open unemployment but from substantial underemployment, hidden by seasonal agricultural rhythms and household-industry decline against modern competition. He calls for ‘disagriculturalisation’ of the rural economy through non-agricultural employment, better roads, marketing, credit, and a willingness on the part of the rural rich — beneficiaries of the Green Revolution — to fund the rural facilities that the well-to-do have so far resisted.

Essays

The Problem of the Educated Unemployed

By DR. M. C. MUNSHI

Munshi argues that India’s gravest planning failure has been in employment generation, with the Five-Year Plans paying lip-service to the problem while doing little beyond the Second Plan. He marshals Employment Exchange data, Bhagwati Committee figures, and Directorate-General of Employment statistics to show that the rate of new job-seekers (42.8 per cent in 1972) has far outpaced the industrial sector’s capacity to absorb them, with women job-seekers and unemployed engineers growing especially fast. Beyond the data, he insists the problem has crossed from economics into sociology — requiring ‘a Beveridge Report, if not a Beveridge Volume on Social Security’ — and that with population growing at 2.58 per cent per year and urbanisation accelerating, an honest social order is required.

On solutions, Munshi rejects an ‘All-India’ approach in favour of regional, atomistic interventions. He surveys Mid-Term Appraisal commitments (30,000 teachers, 500 Soil Survey Parties, Indian Oil graduate-shops), state-level Small-Scale Industries Development Institute support, and the Syndicate Bank and State Bank self-employment loan schemes (the Bhagwati Committee projected employment for 2.8 lakhs at Rs. 130 crores in 1972-74). He proposes Chambers of Commerce ‘adopt’ a region, on the model of Arvind Mafatlal’s organisation, and run three flagship schemes: 4-5 entrepreneur clusters (engineering, chemicals, food-processing), large-scale industry-sponsored ventures with five-year hand-offs, and a trade-union-administered Unemployment Insurance scheme for organised white- and blue-collar workers, weaning unions away from confrontational preoccupations toward constructive unionism.

• Five-Year Plans paid lip-service to employment generation; only the II Plan offered specific programmes, leaving a growing backlog.
• Employment Exchange registrations rose from 3.01 million (1968) to 6.89 million (1972); women job-seekers jumped from 485,000 (Dec 1970) to 705,000 (Dec 1971).
• Industrial sector could offer only 4 million additional jobs across 1951-70; unemployed engineers grew sharply with diploma-holders dominating registrations.
• Educated unemployment is now a sociological problem, not just an economic one, requiring social-security thinking on the scale of Beveridge.
• Solutions should be regional and ‘atomistic’ rather than All-India, with Chambers of Commerce ‘adopting’ regions for 3-5 year remedial programmes.
• Three concrete schemes proposed: clusters of 4-5 small entrepreneurs, large-scale industry sponsorship with five-year independence, and trade-union Unemployment Insurance.

Rural Unemployment and Underemployment in India

By PROF. PRAVIN VISARIA

Visaria opens with the 1971 census finding that 80 per cent of India’s 547 million live in roughly 567,000 villages, where nearly 44 crore persons survive at a subsistence level of income. He argues that the rural and urban unemployment problems differ enough — in measurement and in remedy — that a country-wide aggregate view is misleading. Drawing on the National Sample Survey’s rounds and his own earlier work, he shows that two-thirds of rural workers are self-employed or own-account workers on small holdings, and that the unemployed-but-seeking measurement (2-7 per cent of rural population) badly understates the real waste of labour through chronic underemployment, which he estimates at four to five per cent of available man-weeks.

He insists that open unemployment is rare in rural India; the binding constraint is seasonal idleness and the inability of small landholdings and household industries to absorb available hands as productivity per worker stays below the minimum that needs to be provided. Bottom 30-40 per cent of rural households — disproportionately Scheduled Castes and Tribes — are ‘outside the labour force’, neither underemployed nor unemployed but chronically ill, disabled or aged, and unreachable by simplistic schemes. Past Community Development, Rural Industries and IADP-style programmes have under-delivered, and irrigation extension is limited by the land available. Visaria’s prescription is ‘disagriculturalisation’ of the rural economy: a substantial increase in non-agricultural rural employment, augmented health, education, transport, banking and credit facilities, and specialised agricultural-marketing agencies, financed in part by the rural rich who have benefited from the Green Revolution but resist paying for rural amenities.

• 80 per cent of 438 million Indians (of a 547-million total) live in roughly 567,000 villages, where 44 crore persons survive at subsistence.
• Open unemployment is rare in rural India; substantial underemployment, masked by seasonality, is the real waste — about 4-5 per cent of available man-weeks.
• Two-thirds of rural workers are self-employed or own-account workers on small holdings; only one-third are wage labourers.
• Bottom 30-40 per cent of rural households are ‘outside the labour force’ — ill, disabled, aged, or chronically underemployed Scheduled Castes and Tribes — and unreachable by standard remedies.
• Community Development, Rural Industries Projects and IADP have under-delivered due to organisational reconsideration and an incomplete framework.
• ‘Disagriculturalisation’ — substantial non-agricultural rural employment, with the rural rich (Green Revolution beneficiaries) funding rural amenities — is the recommended direction.

---

Generated by the v1.5 extraction pipeline. Awaiting editorial review.