Employment and India's development and reforms

An analytical description of the employment generation process in the Indian economy and a critical assessment of the concepts and definitions used in various sources of data on employment are presented. Using the data since early 1970s from the National Sample Survey, linear trend regressions on rates of employment, unemployment, labour force participation and employment status (i.e., being self-employed, in regular wage and salary employment and in casual employment) are estimated. They show no sustained trend in the growth and structure of employment. Nearly 60% of the usually employed persons in rural areas and little over 40% in urban areas were self-employed even as recently as 2005-2006. The pursuit of a strategy of capital intensive industrialization founded on insulating the economy from domestic and import competition underlies the poor employment performance. Reforms of strategy began hesitantly in the mid-80s and became more systemic and extensive 1990-1991. Reforms accelerated aggregate growth considerably but had little effect on employment. Only further and deeper reforms can generate sustained and rapid growth of productive employment.