Causes of Unemployment in India

Unemployment in India stems from several structural features of the economy rather than any single cause. The main causes studied in this chapter are:

1. Rapid population growth — India's population and labour force have grown rapidly, but the rate of new job creation has often lagged behind, so the economy has to run harder each year just to absorb new entrants to the labour force, let alone reduce the existing backlog of unemployed persons.
2. Slow and uneven growth of industry and agriculture — output growth in some periods has not been labour-intensive enough (see cause 4) or fast enough to generate proportionate employment, especially in the organised sector.
3. Seasonal character of agriculture — since a large share of India's — and Gujarat's — workforce still depends on agriculture, and Indian agriculture is heavily seasonal, workers in this sector face months of enforced idleness between cropping seasons (seasonal unemployment, from the previous section).
4. Capital-intensive nature of modern technology — as industries adopt more mechanised, capital-intensive production methods to stay competitive, they generate a given level of output with fewer workers than older, more labour-intensive techniques did, slowing the absorption of India's growing labour force into industry.
5. Inadequate and mismatched education/skill training — the education system has often emphasised general/degree education over vocational and technical skills that industry actually needs, producing graduates whose skills do not match available jobs — a direct cause of structural unemployment.
6. Rural-to-urban migration — workers migrate from villages to cities in search of better opportunities faster than cities can create new jobs, adding to urban unemployment and underemployment, often in the informal sector. …