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Q.How has liberalization impacted the employment patterns in India? Mention any two ways.

CBSECBSE Class XII Board 2023Subjective· 2mImportance★★★★★
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Liberalisation has shifted India's employment from agriculture toward services and increased informal, contractual work while formal job creation has lagged behind economic growth.

When India opened its economy in 1991, dismantling the License Raj and inviting private and foreign investment, the hope was that rapid growth would translate into widespread job creation. The reality has been more complex. Growth accelerated, yes—but the pattern of employment changed in ways that revealed both opportunities and deep structural challenges.

The most visible shift has been sectoral reallocation. Before liberalisation, nearly two-thirds of India's workforce was tied to agriculture, a sector that contributed a shrinking share of GDP. The reforms unleashed growth in services—information technology, telecommunications, banking, retail—and to a lesser extent in manufacturing. Over the decades since 1991, millions of workers have moved out of agriculture. But here is the catch: they have moved overwhelmingly into services, not into factories. The services sector, particularly IT and business process outsourcing, became the poster child of liberalised India, generating high-value jobs for the educated urban middle class. Manufacturing, which typically absorbs large numbers of semi-skilled workers and has been the engine of mass employment in other developing economies, grew far more slowly. Capital-intensive industries expanded, but they did not create jobs at the scale needed for a country adding millions of young people to the labour force each year. …

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