Issues of Job Creation in India
Job creation as an issue is as central to the needs of the economy as skill development is. There is no point in promoting skill development, if employment opportunities are not provided parallely. It is crucial to improve the job creation scenario in the country and provide more and more job opportunities to individuals. With the increase in the GDP of the country in the years 2005-2010, it was observed that the job creation was not in line with the required numbers. It is estimated that around 12 million people are added to the workforce every year and only 5 million jobs are created by the industry. Furthermore, when the GDP was 6% in 2000-2005 and 8.6% in 2005-2010, the net jobs created remained at approximately 26 million and it is a huge sign of worry. It has been observed that creating good jobs in the country has always been an issue of concern and is at further risk considering the slowing down of the economy at present.
Due to the modernisation of the economy, the job creation scenario is disappointing in the agriculture sector too. Also the manufacturing sector has lost several jobs over the years and has not been able to make up for the lost jobs. Additionally, majority of the jobs created every year are in the unorganised sector that do not demand greater skills and are of very low productivity. These jobs provide no job security, or benefits to individuals and as a result people are naturally not attracted to these jobs. When it comes to jobs in the service sector that are of high productivity, very few jobs are created and the employment growth is not very satisfactory. It is a challenge facing the economy at the moment, to be able to create more jobs outside agriculture and jobs that require greater skills and high productivity. It is imperative to create jobs that are able to provide security, benefits etc.
The greatest concern that arises with the encouragement and initiatives towards skill development and vocational courses is that these efforts should not be carried out just for the sake of it. If proper placements cannot be provided to trained individuals, these efforts would eventually go waste and the economy will not be able to grow anyway. Hence it is very important to set targets for job creation and reach those targets to reap the most benefits from the demographic dividend.
According to the Economic Survey of 2013, almost 95% of the Micro, Small and Medium Enterprises (MSMEs) are not able to grow because of the present regulatory framework and the regulations that do not allow private enterprises to expand easily. It is due to these rules and regulations that these enterprises are not able to grow and create more employment opportunities for individuals in the country. Only 5% of the MSMEs are able to expand with less hardships and are contributing towards creating sustainable jobs that contribute to high productivity. The government is trying to improve the situation of formal employment in the country.
Globally, almost 90% of the total jobs are created by the private sector and at present, India needs to work on developing and improving the private sector. The private sector has to achieve growth at such a rate that more and more jobs are created. Many services in India can play a prominent role in creating jobs like tourism, transport, information technology and banking. These sectors are expected to see a rise in the Twelfth Plan as more and more focus would be on this. There is a need to come up with sector specific strategies to make sure that there is a growth of employment opportunities in these sectors. There is also a need for simplification of the labour laws and both the Central and State government need to take initiatives at their level for job creation. The hindrance to entrepreneurs and startups should also be removed and the state government should encourage these initiatives as they bring multiple job opportunities.
According to a report by the Planning Commission, India has the potential to create 2500 scalable businesses. With that potential, it becomes crucial to encourage startups and raise awareness about entrepreneurship and self employment. These businesses could not only generate huge revenue but would also contribute highly to the job creation in India. There is also a need for special skill development for entrepreneurs in the country and there is no such provision at present. If efforts are made in the direction, there is a high possibility of exponentially increasing the job opportunities in the country and accelerating the economy of India by making the best use of the workforce as a result of demographic dividend.
There are many ways to promote startups and entrepreneurs in India. Some of the ways can be by encouraging collaborations and allowing the private sector to operate in incubation in PPP mode. The government can scale up the incubation programmes and facilitate angel investment. There is also a need to simplify the business processes and change in regulatory frameworks. The regulatory hurdles for fund raising can be removed. The entrepreneurial culture has to be created by upgrading courses and promoting commercialisation of innovation. Online portals and networks of labs can help in promoting entrepreneurship as a career path.
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