EMPLOYMENT AND POVERTY ALLEVIATION
Section 1
Approach to employment generation
and poverty alleviation 3.1 The Eighth Five Year Plan envisages a three-pronged approach to employment gen- eration and poverty alleviation : a high rate of growth of the economy; an employment-ori- ented growth structure; and special employ- ment programmes. The first two ensure an increasing volume of economic activity with larger and more productive utilisation of hu- man and capital resources, leading to enhance- ment of employment and income opportunities. The special programmes are aimed at supplementing the employment gen- erating and poverty alleviating impact of the growth process with particular focus on en- hancement of income levels of specific target groups consisting of the poor and the unem- ployed by assisting them directly with assets, skills and employment opportunities.
3.2 Non-availability of estimates based on comprehensive surveys prevents a direct as- sessment of trends in poverty, employment and unemployment during the first three years of the Plan. The last such survey by NSSO from which detailed information is available related to 1987-88. The limited thin' sample based surveys subsequently undertaken by NSSO, to which reference is made later on, also related to the years preceding the Plan, the last one relating to 1992. Results of the detailed sarvey undertaken during 1993-94 are not yet available. An assessment of the experience of the first three years of the Eighth Plan (1992- 95) would, therefore, have to be based an indirect evidence and estimates, particularly on the estimated rates of growth of the econ- omy and its composition in terms of its dis- tributional and employment effects and the reach and effectiveness of the special pro- grammes in alleviating unemployment and poverty among the target groups.
3.3 During the first three years of the Plan, the rate of growth of the economy has been about 4.6 per cent per annum, which implies a rate of growth of 2.4 per cent in per capita terms. This is lower than the growth experi- enced over the Preceding ten-year period as well as the rate envisaged in the Plan. It is, however, seen that the composition of growth has somewhat changed in favour of sectors with higher employment intensity, so that em- ployment growth during 1992-95 (2.03 per cent per annum) has, in fact, shown some improvement over that experienced during the Seventh Plan (1.78 per centper annum) and the period 1990-92(1.50 per cent per annum). While the growth of the agriculture sector, averaging at around 3 per cent per annum, the employment growth mostly taking place in the agriculture and unorganised sectors of the economy and the substantial expansion of spe- cial programmes particularly of rural employ- ment expanding substantially may have had a positive effect on poverty alleviation, a faster Increase in the prices and declining availability of essential commodities, particularly food- grains, would have had an opposite effect. Analysis of the functional relationship be- tween incidence of poverty and alternative sets of explanatory variables shows that the set of explanatory variables, per capita GDP( in ag- riculture in the case of rural poverty and in manufacturing, electricity and construction in the case of urban poverty) and relative prices of foodgrains give the best and consistent re- sults and also enable estimates of incidence being made for recent years. These results are summarised in Table 3.1 Estimates based on official methodology show that incidence of poverty in 1994-95 is likely to have been lower than in the year preceding the start of the Eighth Plan, i.e. 1991-92. The decline is seen to be sharper in urban than in rural areas. Estimates using Expert Group methodology however, show a marginal increase increase in inci- dence of poverty In 1994-95, as compared to 1991-92, because of a slight increase in rural poverty whereas urban poverty is seen to have declined.
Section 2
Employment : Perspective and Esti-
mates for 1992-2002 3.4 The employment strategy for the Eighth Plan was formulated as part of a ten-year per- spective of achieving near- full employment at the end of the ten-year period 1992-2002. Open unemployment at the beginning of the
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Table 3.1
Trends in Incidence of Poverty 1987-88 to 1994-95
(Per cent)
Based on NSS Data Based on
functional
relation-
ship
1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 93-94 94-95
Official Methodology
Rural 33.4 22.5 20.3 19.7 20.5 22.9 19.9 19.3
Urban 20.1 14.2 13.3 10.8 12.9 13.0 13.2 9.5
Combined 29.9 20.4 18.5 17.4 18.5 20.3 18.1 16.6
Expert Group Methodology
Rural 39.1 39.2 33.7 35.0 40.0 41.7 39.7 40.7
Urban 40.1 38.4 36.0 37.0 37.6 37.8 37.8 36.6
Combined 39.3 39.0 34.3 35.6 39.4 40.7 39.2 39.6
Eighth Plan was estimated as 1.7 crore out of a labour force of 31.9 crore. The educated accounted for about 40 per cent of the unem- ployed. In addition, 60 lakhs of the workforce of 30.2 crore were, estimated to be severely underemployed in as much as they were with- out work for at least half of the reference week. A backlog of unemployment of 2.3 crore at the outset of the Plan was, therefore, assumed for planning purposes. Additions to labour force during the Eighth Plan period and the period 1997-2002 were estimated to be 3.6 crore and 3.5 crore, respectively, taking due note of likely trends in growth and age structure of population and labour force participation rates. This implied that the task of achieving a near full employment situation by the year 2002 would call for creation of about 9.4 crore additional employment opportunities, or that employment would have to grow at the aver- age annual rate of 2.7 per cent, during. the period 1992-2002. Further, as the incidence of poverty was much higher than the incidence of unemployment, implying that a large mass of the employed worked at low levels of income, it was emphasised that employment augmen- tation of the employed in terms of levels of income and productivity, besides employment expansion of the order indicated earlier, would form an essential ingredient of employment and poverty alleviation strategy.
3.5 The estimate of backlog of unemploy- ment at the beginning of the Eighth Plan was based on data available form the 43rd Round Comprehensive Survey on Employment and Unemployment conducted in July 1987 - June 1988 by NSSO and estimates of additions to labour force and an assessment of the employ- ment growth during the period 1987-88 to 1991-92. Since then, data on employment for 1991 became available from the 1991 Census and data on employment as well as unemploy- ment from the "thin" sample surveys of the 45th (July 1989 - June 1990), 46th (July 1990 - June 1991), 47th (July - December 199 1) and 48th (January - December 1992) Rounds of NSSO. It is pertinent to briefly examine these data and see if they warrant any revision in the estimates of backlog in 1992.
3.6 According to the Census 1991, employ- ment in terms of Main Workers, registered an average annual growth of 2.37 per cent during 1981-91. [State-wise and sector-wise rates of employment growth are given in Annex. 3.1]. To a certain extent, this figure may represent an overestimate of employment growth be- cause of a better coverage of women as work- ers as a result of the "probing" questions asked in 1991 Census. On the other hand, the number of Main Workers in 1991 'according to the Census is lower than the usual principal status workers in 1987-88 according to NSS. It thus seems that the Census 1981 as well as 1991 underestimate the number of workers, particu- larly female workers, in spite of the special efforts made in the 1991 Census. Estimates of labour force and unemployment according to 1991 Census are not yet available.
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3.7 The NSS estimates on the basis of the "thin" sample during 1989-90, 1990-91, 1991 (July - December) and 1992 (January - Decem- ber) suggest an unusually high rate of growth of labour force during this period, about 89 lakh per annum as against 53 lakh per annum during 1983-88. They also suggest an unusu- ally high rate of employment growth of 3.4 per cent or over one crore per year. As a result, unemployment rate during this period is esti- mated to be only around 2.8 per cent against 4.8 per cent in 1987-88 and the number of weekly status unemployed in July, 1992 would be only 86 lakh as against the backlog of 1.7 crore in March 1992 as estimated in the Plan earlier. Preliminary indications derived from the fix* sub-round (July - September, 1993) of the 50th Round (1993-94) full scale survey, however, suggest that unemployment rates during 1993-94 could be well above 4 percent and the total number of unemployed could be around 1.7 crore, closer to the estimates made by planning Commission of around 1.8 crore in March 1993, on the basis of the estimated backlog of 1.7 crore in March 1992 and esti- mates of growth of labour force and employ- ment during 1992-94. In view of the limitations of the Census estimates and certain unusual and rather implausible features of the "this' sample estimates on the one hand, and preliminary indications that the estimates of the full scale NSS survey for 1993-94 are likely to turn out to be in line with estimates made by the Planning Commission, it has not been considered necessary to revise at this stop estimates made earlier and the ten-year perspective set in the Plan document.
Employment Strategy of the Eighth
Plan 3.8 The Plan sought to adopt a decentralised and diversified strategy of faster growth of employment-intensive sectors, sub-sectors and activities to achieve the desired levels of growth of employment corresponding to the rate of grow* of 5.6 per cent per annum, on an average, envisaged for the economy in the Plan. The main elements of the strategy, which have also been endorsed by the NDC Commit- tee on, Employment, were as follows:
(i) A faster and geographically diversified growth of agriculture, so that the hitherto lagging regions have a larger share in agricultural growth; and diversification of agriculture into high value, more la- bour-intensive crops like vegetable and fruits, particularly in the agriculturally better developed regions;
(ii) Development of infrastructure and market- ing arrangements for agro-based and al- lied activities like dairy, poultry, fishery and sericulture to accelerate growth of these sectors;
(iii) An expanded programme of development and utilisation of wastelands for crop cul- tivation and forestry;
(iv) Development of an appropriate support and policy framework for the growth of non-agricultural, particularly manufac- turing activities, in rural areas, including rural towns;
(v) Greater attention to the needs of the small and decentralised manufacturing sector as a major source of industrial growth, particularly in the production of con- sumption goods and manufactured ex- ports;
(vi) Large scale programmes of construction of infrastructure and residential accom- modation, the latter to be encouraged par- ticularly in the private sector through appropriate land, financial and fiscal poli- cies;
(vii) Strengthening of basic health and educa- tion facilities, particularly in the rural ar- eas;
(viii) Facilities for faster growth of the services and informal sector activities through greater ease of entry and suitable support systems:
(ix) Identification and relaxation of legislative and policy measures found to restrict growth of employment;
(x) Greater flexibility in special employment programmes and their integration with sectoral development with a view to en- suring their contribution to growth and sustainable employment; and
(xi) Revamping of training systems to intro- duce greater flexibility and responsive- ness to labour market trends, and larger involvement of users of the system's out- put, and to provide opportunities for up- gradation of skills of the employed workers and also, for the development of
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entrepreneurship for the actual and poten- tial self- employed.
3.9 With the goal of near full employment expected to be achieved only over a period of time, and the likely slower growth of employ- ment in the initial years of the Plan due to the stabilisation programme, the Plan also envis- aged that continuation and expansion of spe- cial employment programmes was necessary. The NDC Committee on Employment had suggested that wage employment programmes should be linked to rural infrastructure devel- opment and to integrated development of small and medium towns. The Committee also suggested that a limited employment guaran- tee be introduced in selected areas. At the same time, the Plan as well as the NDC Committee on Employment stressed the importance of accelerating employment growth through the development process itself since special em- ployment programmes, howsoever important they are, could only supplement employment generation resulting from the development process.
3.10 The employment strategy adopted in the Plan was to result in employment growth of 2.6 percent to 2.8 per cent per annum correspond- ing to an average annual rate of growth of 5.6 per cent with its sectoral composition as envis- aged in the Plan. In other words, additional employment opportunities of the order of 85 lakh per annum, on an average, was envisaged during the Eighth Plan period. A continuation of the strategy during die subsequent five year period 1997-2002 is expected to lead to the generation of 95 lakh additional employment opportunities per year, on an average, during the period and to reduce unemployment to negligible levels by 2002.
Review of Developments during 1992-
95 3.11 Achievement of the rate of employment growth as envisaged in the Plan, is primarily dependent on the growth rate and the sectoral and sub-sectoral pattern of growth of the econ- omy which is further influenced by macro- economic and sectoral policies. Major policy changes have taken place in the indian econ- omy during the past four years. Stabilisation policies for containing fiscal and current ac- count deficits are inherently contractionary in nature and tend to depress output growth as
well as employment growth. This apprehen- sion had duly been noted in the discussion on employment prospects in the Eighth Plan document. Stabilisation measures are never- theless an essential part of the policies of struc- tural adjustment and economic reforms which aim at leading the economy to a higher growth path. It is, however, important to note that the slow down of economic growth which was rather sharp during 1991-92 and also resulted in only a small growth of employment during that year, was soon reversed, as the economic restructuring and reform process was put in place simultaneously with the stabilisation process. The growth rate of the economy has averaged to 4.6 per cent per annum during the first three years of the Plan though it still Falls short of the 5.6 per cent envisaged in the Plan.
3.12 Besides the rate of growth, the Plan also emphasised the need to enhance the employ- ment orientation of growth through strategic., and polices relating to various sectors as listed in the preceding sub-section. It is, therefore, pertinent to briefly review the major develop- ments and policy and programme initiatives in this direction.
3.13 A regionally and cropwise diversified agricultural growth is among the major ele- ments of the strategy envisaged for an employ- ment oriented growth in the Eighth Plan.The triennial rate of growth of foodgrains produc- tion during the period 1992-95 was 4.66 per cent per annum. Analysis of the triennial rate of growth of States shows that foodgrains pro- duction in Bihar, Gujarat, Karnataka, Madhya Pradesh and Maharashtra, which have high employment elasticities in agriculture, has reg- istered growth rates higher than the national rate. Fruit and vegetable production, which is highly employment intensive, has expanded considerably. Area under fruit crops is esti- mated to have increased by 11.5 per cent and production by 15.1 per cent during 1992-93 Vegetable production rose by 21.2 per cent in the same period.
3.14 Certain policy and programme initia- tives in the small scale and decentralised in- dustry sector have also been introduced which are expected to have accelerated the growth of this sector and made significant contribution to employment generation, as envisaged in the Plan. Capital participation upto 24 per cent by large and medium industrial houses in small scale units permitted by the 1991 industrial policy for small scale units, the package of measures announced by the Reserve Bank of India for ensuring adequate, and timely credit for village and small industries, enactment to provide for payment of interest on delayed