What are the causes of Unemployment in India

Unemployment is a situation where a person who is capable, qualified and willing to work at the existing wage rate does not get work, There are 8 major unemployment causes in India.


Causes of Unemployment in India

  1. Lack of stock of physical capital

All economic activities require physical capital to produce them.  A farmer needs a plough, tractor and other machines; an industrialist needs land, machines, minerals etc.; and service sector needs modern technology, buildings, tools, etc. All of this is physical capital. India has not been able to maintain its capital stock to fulfil the demands of a rapidly increasing population.

  1. Population growth and Technology

As the focus on greater productivity increases, industrialists and employers prefer to employ machines over humans for various jobs. They cost lesser than employing labourers and produce more. However, a country like India with rapid population growth need labour-intensive techniques instead of capital intensive techniques.

  1. Dependence on Agriculture

A majority of India’s population is still employed in the primary sector while the primary sector’s share in GDP has consistently declined. This has led to disguised unemployment and greater urban-rural economic gap. Agriculture is also seasonal in nature which leaves a majority of the population vulnerable to seasonal unemployment.

  1. Fall of Cottage and Small Industries

Many artisans and rural workers were earlier employed in cottage industries but since the market has been flooded with cheap goods from MNCs, cottage industries have lost their market, leaving many people unemployed.

  1. Labour Mobility

India has seriously labour mobility issues since labourers often do not migrate to places where their skills might be better utilised due to language and cultural barriers, strong bonds with families, etc.

  1. Social Norms

India has many regressive social norms. In many families, women are not allowed to work outside their homes. This makes many women unproductive economic capital. Due to the caste system, many people are confined to certain occupations even though they may be better suited for something else.

  1. Low Economic Growth

Low economic growth along with high population growth causes an imbalance and creates a vicious cycle of poverty where demand for employment exceeds the supply of jobs.

  1. Job Specialization

Jobs in the capitalist world have become highly specialised but India’s education system does not provide the right training and specialisation needed for these jobs. Thus many people who are willing to work become an unemployable due to lack of skills.

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