Disguised Unemployment in India : A Probing Look

Disguised unemployment in India

Disguised Unemployment in India

The unemployment scenario is quite bleak in India. With every passing day, we are heading towards a more precarious situation. A developing economy like India is defined by its large population and large-scale unemployment, further leading to socio-economic issues like malnutrition, poverty, drug & substance abuse and anti-social & criminal activities, etc.

At the core of such socio-economic issues lie several types of unemployment – structural, frictional or seasonal. However, one which is more severe and even more difficult to track is the disguised unemployment. Such an unemployment cannot even be reflected in the official unemployment records.

Let us look at what ‘Disguised Unemployment’ actually is. In layman’s language, it is the phenomenon wherein more people are employed than actually needed. Usually, this has been witnessed in developing economies and more so in labour-intensive economies.

Disguised unemployment is primarily traced in the agricultural and the unorganised sectors of the economy. As the primary sector of the Indian economy, Agriculture provides employment to almost 51% of the total population. However, the sector’s contribution to the country’s GDP is just 12-13%.

Causes of Disguised Unemployment

The causes for such an unemployment are many. Few of which are:

  1. Population growth: High growth in population leads to surplus labour, especially in the rural areas. India, being the second most-populous country, has almost 70% of its total population in the rural areas (2011 census). Surplus labour exists in the rural areas, however, employment in such areas mostly remains seasonal, thus causing disguised unemployment.
  2. Poverty: Poverty results in inability to purchase land and thus people have access to limited capital. Limited capital: It further increases dependency of more and more people on limited means.
  3. Labour-intensive economies: With such high population, labour is available at cheaper rates. Thus, more people are easily employed for a particular work, which can be done by lesser number of people.
  4. Limited skills and knowledge about better opportunities: Disguised unemployment is also caused by limited skills of the labourers. At the time when majority of India’s most population lives in the rural areas with limited means, people lack proper skills to be recruited at better places.

Possible Solutions

India, as an economy, has all the above features as a developing country. From a holistic point of view, several solutions of tackling disguised unemployment can be:

  1. Educating the masses for the population control measure through family planning programmes.
  2. Making credit available to the people for self-employment.
  3. Providing skill development and entrepreneurship programmes.
  4. Encouraging mobility of the workforce from rural to urban areas.

Measures Taken by the Government

The Indian Government has taken several measures to curb disguised unemployment and unemployment as a whole. Many self-employment schemes have been launched and older ones modified to curb this social problem. Some of the Government’s efforts have been:

  1. MNREGA and RAY: The MNREGA, Mahatma Gandhi National Rural Employment Guarantee Act, passed in the year 2005, was introduced as a social security measure to guarantee the ‘right to work’. Essentially, it provided at least 100 days of wage employment in a year to each household’s adult members. RAY (Rajiv Awas Yojana), on the other hand, provides for affordable housing for the slum dwellers in the urban areas, thereby reducing the burden on the unemployed.
  2. The National Policy on Voluntary sector (2007) envisages government collaboration with the voluntary organizations in poverty alleviation, skill promotion and entrepreneurship development.
  3. SHGs (Self-Help Groups): Self-help groups are being promoted with broad anti-poverty agendas. Women empowerment and increased self-employment are the objectives embedded in the activities of these groups. Such groups have proved to be phenomenal in Andhra Pradesh and Kerala. Thus, this model is being replicated in the other states of the country.


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