7th Five Year Plan (Vol-2)
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5.1 Progressive reduction of unemployment has been one of the principal objectives of economic planning in India. It has been envisaged that the growth of the economy would not only increase production but also provide the capacity for absorbing the backlog of unemployment and under-employment and a substantial proportion of the additions to the labour force. The solution to the problem of unemployment—and the poverty that goes with it—has to be found ultimately through a high rate of overall economic growth. Considering, however, the relatively low levels of income from which the economy has to be pulled up, it was recognised that there would be some leakage in the percolation effects of growth and, in any case, these percolation effects would not be sufficient to generate the required employment opportunities. It was, therefore, felt necessary in the different Plans to have supplemental programmes for specific target groups/areas for employment creation, income generation and poverty alleviation. These have taken the form of direct employment programmes for providing seasonal employment to the agricultural labourers on rural capital works and beneficiary target-group-oriented programmes of asset provision, input deliveries and marketing and credit infrastructure creation.

5.2 Employment and manpower policy in the Seventh Plan has to be viewed against this basic approach. The task is one of adopting a suitable structure of investment and production, appropriate types of technology and mix of production technique and organisational support which would help promote growth in productive employment. Employment generation as an objective does not mean the adoption of a static technology. It is not advisable to insulate the economy from the world trends in technolo-'gical changes. Technological upgradation, modernisation and scientific advances in production process constitute the essence of growth of productivity whether it be in organised industry, agriculture or small industry. A clear view of efficiency and employment effects downstream should be formulated before setting about the management of technological change. There must be suitable arrangements and adjustment policies in terms of education, training and retraining and re-orientation of workers in order to avoid dislocation effects and make the process of technology adoption smooth.

5.3 In formulating the employment strategy, a key role has to be assigned to the growth of the agricultural sector. A steady growth in agricultural production through the expansion of irrigation, increases in cropping intensity and the extension of new agricultural technologies to low-productivity regions could create a large volume of additional employment because these means have a high potential for labour absorption. However, the agricultural sector alone cannot be expected to eliminate the backlog of unemployment and absorb the additions to the labour force. The rate of industrial growth must be accelerated. However, as experience has shown, even a high rate of industrial growth would not be able to create additional employment to absorb more than a fraction of the unemployed and under-employed labour force in the organised industrial sector. Therefore, programmes of rural development and, in particular, of massive rural capital formation in the form of construction become necessary. This strategy would also help raise the rate of growth of agriculture. Further, it would increase the incomes and purchasing power of the weaker segments of the population and thereby provide the demand support to the growth process.

5.4 Employment generation is not synonymous with creating wage employment. It is necessary to combine the provision of wage employment with the creation of conditions for additional self-employment. Besides, the productivity of the labour intensive informal urban sector must be raised through better urbanisation and introduction of modern technology.5.5 The problem of the educated unemployed raises special issues. It has to be tackled through proper educational planning and scheme of training, skill formation and entrepreneurial development.

Labour Force and Employment

5.6 The Sixth Plan had estimated a net addition to the labour force of the order of 34 million in the age-group of 5-plus during 1980-85. The backlog of usual status1 unemployment at the beginning of March, 1980 was estimated at around 12 million. These two together indicated the magnitude of employment to be generated during the Sixth Plan period.

5.7 For the Seventh Plan period, information is available on labour force participation rates and unemployment rates based on the 32nd round (pertaining to 1977-78) in the National Sample Survey Organisation's study on Employment-Unemployment (also used in Sixth Plan document) and from the 38th round (pertaining to 1983 for the first two subrounds thereof covering the period January-June 1983). The usual status unemployment rates by age-sex-residence derived from these two sub-rounds of the 38th round are given in Annexure 5.1. Since medium-term variations in labour force participation rates may not be large, the labour force estimates for March, 1985 and 1990 for the different age-groups have been derived by using the same participation rates (i.e., from the 32nd round) as those which were used for estimating the labour force for the last Plan period (1980-85). These estimates are given in Table 5.1.

Estimates of Labour Force (Usual Status)
(In million)

Age Labour force in
Labour force in March 1990 Annual increase (per cent)
1 2 3 4
5+ 305.40 344.78 2.46
15+ 287.82 326.61 2.56
15-59 269.81 306.08 2.55

Note: Worked out using the labour force participation rates from N.S.S. 32nd round.
* In addition to the above, there is a sizeable population which is economically active in subsidiary occupations. The number of subsidiary workers, using the N.S.S. 32nd round rates, is nearly 27.10 million for age group 5+ in March, 1985.

5.8 The estimates of usual status unemployment as at the beginning of the Seventh Plan, based on the relevant rates from the 32nd round survey are given in Table 5.2 for different age-groups and with sex-residence break-up.

1. This concept is meant to measure the usual activity status— employed or unemployed or outside the labour force—of those covered by the survey; the activity status is determined with reference to a period of 365 days.

Estimates of Unemployment (Usual Status) in March, 1985 on the basis of 32nd Round
(In million)

Category Age-group  
(5+) (15+) (15-59)
Rural males
Rural females
Urban males
Urban females


Total 13.89 13.25 13.10

5.9 However, it would be useful to have estimates of backlog of unemployment based on more recent survey information (on the 38th round), notwithstanding the fact that this is partial and provisional. These estimates are given in Table 5.3 for the different age-groups and with sex-residence break-up as in March, 1985.

Estimates of Unemployment (Usual States) in March, 1985 on the basis of 38th Round
(In million)

Category Age-group
(5+) (15+) (15-59)
Rural males 3.76 3.54 3.49
Rural females 1.21 1.13 1.10
Urban males 3.25 3.14 3.12
Urban females 0.98 0.96 0.96
TOTAL 9.20 8.77 8.67

5.10 This estimate of usual status unemployment takes into account only the principal activity status of the individuals, whereas some of them might have had subsidiary occupations. According to estimates based on 32nd Round, 4.68 million of the 13.89 million unemployed aged 5 and over in March, 1985 had some gainful subsidiary work; the 38th Round data suggests that 2.24 million of 9.20 million unemployed in March 1985 had subsidiary work.

5.11 II is seen that the estimate of unemployment (usual status) in March, 1985 as per the latest information is 9.20 million for the age-group 5-plus. A proper comparison of this estimate as at the beginning of 1985 based on the most recent survey data with the estimate as at the beginning of March, 1980 in Sixth Plan document will have to await fuller information from the other two sub-rounds of the 38th Round. Going on the basis of this estimate of unemployment, the overall magnitude of employment to be generated during the Seventh Plan period works out to 48.58 million for the age-group 5—plus.

Estimates of Employment Generation: Achievement during the Sixth Plan and Anticipation for the Seventh Plan

5.12 In the Sixth Plan document, overall employment was expected to grow from 151.11 million standard person years (SPY) in 1979-80 to 185.389 million SPY in 1984-85, i.e., an increase of 34.28 million SPY. It has now been estimated that the employment in 1984-85 would have been of the order of 186.705 million SPY implying an increase of 35.60 million SPY. The growth rate of employment generation during the Sixth Plan period works out to 4.32 per cent per annum.

5.13 In addition to the sectoral investments during the Sixth Plan period which have resulted in an expansion of employment opportunities through the process of growth, there has been in operation important employment/ beneficiary oriented programmes for specific target groups such as the National Rural Employment Programme (NREP),.the Integrated Rural Development Programme (IRDP), the Rural Landless Employment Guarantee Programme (RLEGP), the Training Scheme for Rural Youth for Self-Employment (TRYSEM), and the Scheme for providing Self-Employment to Educated Unemployed Youth. Briefly, the Special Employment Programmes as also the State Employment Programmes are as detailed below:

(i) The National Rural Employment Programme (NREP) aims at generating employment opportunities in the rural areas, simultaneously creating durable community assets for strengthening the rural infrastructure; it also seeks to improve the nutritional status and living standards of the rural poor. The programme operates in close conjunction with other developmental works. For the Sixth Five Year Plan, there was a provision of Rs. 980 crores in the Central sector and Rs. 640 crores in the States sector making a total of Rs. 1,620 crores for this programme. The progress of employment generation as a result of the execution of various works under the programme has been as follows:

Generation of Employment (million mandays)

Year Target Achievement
1980-81 413.58
1981-82 335.73 354.52
1982-83 353.22 351.20
1983-84 322.23 302.76
1984-85 309.13 352.31

(ii) During the Sixth Plan, it was felt that the hard core rural poverty, particularly that pertaining to the unemployment of the landless labourers during the lean agricultural season, had to be tackled in a more direct manner. Accordingly, a new scheme called the Rural Landless Employment Guarantee Programme (RLEGP) was introduced in 1983. The basic objectives of the programme are: (i) to improve and expand employment opportunities for rural landless with a view to providing guarantee of employment to at least one member of every landless labour household upto 100 days in a year; and (ii) creation of durable assets for strengthening the rural infrastructure which will lead to rapid growth of the rural economy. Assistance under the programme was provided to the State/UT Governments on 100 per cent grant basis. Funds amounting to Rs. 500 crores were allocated to them in the last two years of the Sixth Plan. It was originally expected that 360 million mandays of employment would be generated under the programme during the last two years of the Sixth Plan period, i.e., during 1983-85. As against this, 260.18 million mandays of employment were generated during those years.

(iii) The Integrated Rural Development Programme (IRDP) is the single largest scheme for providing direct assistance to the rural poor and is meant for the poorest among the poor. Its objective is to provide productive assets and employment to the poor for enabling them to attain higher incomes and a better standard of living. The IRDP was expected to cover 15 million families to be identified in all the blocks of the country during the Sixth Plan period; on an average, 3000 families in a block were to be provided assistance through this programme. A sum of Rs. 1,500 crores was provided in the Plan as outlay for this programme. The banks were called upon to provide another Rs. 3,000 crores by way of loans to selected beneficiaries. Further, back-up facilities in infrastructure, community projects and assistance to voluntary agencies were also provided.

(iv) The Scheme of Training Rural Youth for Self-Employment (TRYSEM) was initiated in 1979 with the principal objective of removing unemployment among the rural youth. The target was to train about 2 lakh rural youths every year at the rate of 40 youths per block of the country. The TRYSEM is an integrated part of the IRDP and aims at equipping the rural youth with skills to enable them to become self-employed. A rural youth from a family having an income of less than Rs. 3,500 per year was eligible for selection. Preference in selection was given to those who had aptitude for innovation and entrepreneurial activities. Priority was also given to members of SC/ST and women. The accepted mode of training is through institutions under master trainers. According to available information, 9.4 lakh rural youths received training under TRYSEM during the Sixth Plan. Around 50 per cent of them have taken up self-employment.

(v) The Scheme for Providing Self-employment to Educated Unemployed Youth was introduced in 1983 for providing self-employment to educated unemployed youth. The scheme provides for the grants of loan up to a maximum of Rs. 25,000 to educated youth residing in areas other than cities with a population of 10 lakh or more and having no other source of finance for settling down in self-employment. The implementation of the scheme was entrusted to the District Industries Centres under the guidance of the Development Commissioner for Small Scale Industries. An allocation of Rs. 25 crores was made for the programme during 1984-85 in the Central budget to cover Government assistance in the shape of an outright capital subsidy to the extent of 25 per cent of the loans taken by the entrepreneurs from the banks.

(vi) Some State Governments are implementing Special Employment Schemes to provide additional employment opportunities. The Employment Guarantee Scheme (EGS) of Maharashtra operating since 1972, is intended to provide employment on productive works to the workers desirous of rendering unskilled manual work and thereby reduce the incidence of unemployment, under employment and poverty in rural areas. The State Government gave a statutory backing to the guarantee of employment through the Employment Guarantee Act, 1977. The guarantee of work is restricted to unskilled manual work. In 1983-84, 164.5 million mandays of employment were reported to have been generated. There are also schemes by other State Governments for the benefit of the unempolyed whereby training, financial assistance and other incentives are provided.

5.14 The backlog of unemployment at the outset of the Seventh Plan has been estimated at 9.2 million for the age-group 5-plus. It has also been seen that the net addition to the labour force in this age-group would be 39.38 million. These figures indicate the overall magnitude of employment to be generated in the Seventh Plan. The Seventh Plan envisages a growth rate of 5 per cent in GDP. Besides the sectoral programmes, the package of poverty alleviation programmes aimed at giving self-employment and wage employment to the poorer sections of the community will continue on a significant scale during the Seventh Plan. It is expected that additional employment of the order of 40.36 million standard person years would be generated during the Seventh Plan with an implied growth rate of 3.99 per cent per annum. The special employment programmes of NREP and RLEGP would generate 2.26 million standard person years of employment in 1989-90. The employment generation from IRDP has been estimated at 3 million SPY, mainly concentrated in agriculture and other sectors. The projected growth rate of employment between 1984-85 and 1989-90 is given in Table 5.5

Projected Growth of Employment : 1984-85-1989-90  

Sl No Sector Employment in million standard person year Annual growth of
employment (per cent)
1984-85 1989-90 Increase
1 Agriculture 96108 114092 17984 349
  (a) Crop sector 58750 65720 6970 226
  (b) Non-crop sector 37358 48372 11 014 530
2 Mining and quarrying 1 153 1 494 0341 532
3 Manufacturing 26790 33466 6676 455
4 Construction 10427 12624 2197 390
5 Electricity 1 031 1 498 0467 776
6 Railways 1 544 1 688 0 144 1 80
7 Other transport 9440 11 810 2370 458
8 Communication 0951 1 224 0273 518
9 Other services 39261 49 165 9904 460
  TOTAL 186705 227 061 40356 399

5.15 With the spread of the green revolution, there has been increasing demand for immigrant agricultural labour in the peak operational seasons. The additional employment created during these seasons has led to an upward pressure on wage rates and has meant a welcome addition to the incomes of landless labourers in the backward areas. The approach to farm mechanisation will have to be carefully regulated so as to ensure that this demand for immigrant labour is not adversely affected. Since the combined harvester is a major labour-displacing factor of production in agriculture, the existing policy of discouraging expansion of its manufacturing capacity will have to be continued. It has been noticed that from time to time there arise temporary shortages of labour in particular areas (even though there is a general surplus of unskilled/ semi-skilled labour in the country as a whole), and such shortages tend to encourage mechanisation of operations in farming as well as in construction projects. Greater inter-regional mobility of labour would serve to counter the above tendency. Hence, the migration of labour from the less prosperous areas to the more prosperous ones, which is already taking place during the transplanting and harvesting seasons, should be fostered with appropriate policies.

Employment Potential of Sectoral Programmes

5.16 The employment potential/implications of sectoral investments/programmes would be as follows:

(i) Substantial employment would be generated in rural areas through (a) development of irrigated farming and optimum utilisation of the irrigation potential; (b) propagation of the available technologies in dryland/rainfed farming; (c) special programmes for increasing the production of rice, coarse grains, pulses and oilseeds; (d) special programmes for landstock improvement for the utilisation of cultivable wastelands and areas suffering from various problems like alkalinity, salinity and water-logging; (e) intensification of horticulture development in hill or tribal areas and also in wastelands and dry regions; (f) acceleration of the programmes relating to animal husbandry and dairy farming; (g) expansion of activities in the fisheries sector for tapping the vast production potential;and (h) intensification of developmental activity in afforestation.

(ii) The focus of industrial development in the Seventh Plan will be on upgradation of technology, modernisation of equipment, better utilisation of assets and promotion of efficiency. The Plan lays emphasis on adequate growth of sectors like fertilisers, pesticides and essential agricultural machinery to sustain the growth in agricultural production, as also on sizeable increases in the production of wage goods and essentials of mass consumption like surgar, vegetables, oils, drugs, textiles and paper and commonly used consumer durables. This would lead to the creation of considerable employment opportunities in the large, medium and small-scale industry, both in the public and private sectors of the economy. A major thrust to be given in the area of sunrise industries is the development of the electronics industry which would provide employment on a large scale, particularly in the small-scale sector. Automotive industry is another sector which is likely to achieve considerable growth in the Seventh Plan. The development of this industry would provide substantial employment opportunities in the ancilliary and services sector. At the same time, the substantial expansion of output of wage goods would enable the economy to sustain the additional employment wihout inflation.

(iii) In view of the limited potential of the organised industrial sector to absorb increases in the labour force, small-scale industries and the rural non-farm sector will have to play an important role in generating additional employment. As already suggested, there would be substantial employment creation through rural works programmes. In addition, it is expected that if the traditional skills of rural artisans are upgraded and their competitiveness is improved, the rural industrial sub-sector would provide more permanent avenues of employment. The handloom industry is the largest single cottage industry in terms of employment. It is estimated to have employed roughly 75 lakh persons in 1984-85 and is likely to provide additional employment of around 24 lakh persons during the Seventh Plan. A Textile Policy has been announced recently, which inter alia, spells out various measures for the development of the handloom industry in order to preserve the unique role of the handloom and enable the industry to realise its full potential and to ensure higher earning for the handloom workers.

(iv) Irrigation, flood control and C.A.D. programmes are employment-oriented programmes as these provide large employment opportunities in the rural areas, particularly for the weaker sections like the landless labour. The activities under the irrigation and C.A.D. sectors which offer large employment potential are (a) canal works of major and medium projects in which dam construction is substantially complete while the canals are lagging behind; (b) complete on-farm development works, field channels and drainage channels of C.A.D. works; (c) minor irrigation works; and (d) flood control, embankment and anti-erosion works to protect river-banks.

(v) Housing is a highly employment intensive activity. The step-up of investment in housing envisaged during the Seventh Plan would provide employment on a large scale, especially in urban and semi-urban areas.

(vi) Since transport has to be geared to the production and employment targets of other sectors, a model choice based exclusively on employment generation can jeopardise the whole production and employment generation programme of the country. Among the various sub-sectors of the transport sector, the scope for employment generation is largest in respect of (a) rural roads, (b) inland water transport (countryboats), (c) road transport, and (d) ship building, ship repair and ship-breaking industries.


Problems of Surpluses and Shortages

5.17 The Seventh Plan lays emphasis on the harnessing of the country's abundant human resources and improving their capabilities for development. An important aspect of human resources development relates to the development of manpower needed for the fulfilment of the targets of growth of different sectors of the economy. The objectives of manpower planning are to ensure the proper linkage of economic planning with manpower and educational planning so that no plan programme suffers from a lack of the trained manpower that is needed. The problems in this regard are likely to be different for the rural and urban sectors, for the organised and the unorganised labour force and specified sections/classes such as the backward classes and communities including the hill/tribal populations. In each case, the development of skills ought to address itself to the task of generating the appropriate categories of skills in keeping with the level of technology, the local environment and the development process. There has been a steady advancement of technology during the course of the successive Plans and many new/sophisticated areas including electronics have emerged. Under-utilisation of capacities has to be avoided especially in high technology/capital intensive fields by ensuring the availability of matching manpower.

5.18 It has been noticed that alongside surpluses in certain manpower categories, there are critical shortages for certain other categories, and sometimes for specified disciplines under broad categories. In this connection, efforts to bring the development of different skills in line with social needs would involve adequate attention to working conditions, real earnings and incentives so as to counter the market forces, which reflect the existing income distribution and cause imbalances in skill formation. In other words, the relative earnings of each category should be commensurate with the comparative benefits to the economy from their services and should broadly reflect their relative usefulness for meeting the socio-economic needs of the country. In order to avoid imbalances, especially of trained and educated manpower, the existing training programmes would have to be reviewed while the traditional skills of rural artisans require upgradation in tune with the changing village culture and to improve their competitiveness. Fuller utilisation of the already available manpower through the upgradation of skills and on-the-job training/retraining would be necessary. Training facilities will have to be organised for categories of manpower where critical shortages have been identified and in the formation of new skills which are emerging. Policies to attract and develop the required manpower for the hill areas will have to be pursued. Training in intermediate skills should be undertaken on a large scale for the provision of various services, including primary health services.

Stock of Educated Manpower and Unemployment

5.19 The stock of educated manpower of matriculates and graduates and above is esimated to increase during the Seventh Five Year Plan period from 47.72 million in 1985 to 64.39 million in 1990. However, all educated persons are not economically active since quite a large number of them pursue higher studies, specially matriculates, while some may not be seeking jobs. The number of economically active educated persons in 1985 is estimated to be 30.84 million out of which about 76 per cent are matriculates and 23 per cent are graduates and above, the engineering diploma holders constituting about one per cent (Annexure 5.2). During 1985-90, the addition to the economically active persons of the educated categories would be nearly 10.6 million. Using almost the same approach as in the Sixth Plan document, the estimate of educated unemployment at the beginning of 1985 works out to 4.7 million on the basis of 32nd round rates for matric/higher secondary pass and graduates and above, the respective estimates of these two categories being 3.5 million and 1.2 million. However, as was mentioned earlier in para 5.9, it would be useful to consider the estimates based on the latest survey results, namely the 38th round results; using these rates, the estimate of unemployment among the educated manpower, namely, matriculates and graduates and above, is estimated to be 3.7 million as at the beginning of 1985. It would imply the need for creation of at least 9.4 million jobs for the educated over the Plan period, if the unemployment rate is not to deteriorate.

Some Thrust Areas

5.20 A considerable expansion in the job opportunities for educated manpower may be expected in the Seventh Plan due to technological advancement and expansion of activities in the various sectors of the economy. While the job opportunities for the matric/higher secondary pass and engineering diploma-holders would emanate from both the organised and unorganised sectors of the economy, those for the higher categories would be generated primarily in industry, banking, transport, communication and public services. Apart from the traditional service sectors, there would be a notable growth in the demand for manpower for implementing the Plan programmes at different levels, specially with the new emphasis on decentralised planning.

5.21 In recent years, technical education has undergone significant improvement and its scope has been enlarged by adding new fields. In this context, special attention would need to be given to such areas like electronics, computer systems, nuclear science, satellite communications, environment engineering, bio-engineering and non-conventional energy sources development and technology. The emphasis on R and D effort has to be accelerated for maintaining the tempo of growth of technology. It is also necessary to steadily improve the quality of teaching facilities and to replace obsolete equipment to remain competitive with the emerging world trends in science and technology. A close coordination between educational training institutions and industrial establishments is necessary and teaching programmes may be arranged on exchange basis to keep the faculty informed of the latest needs of industry.

5.22 Manpower planning in the field of electronics would deserve special attention in view of the tremendous growth of this industry in recent years and even a faster growth envisaged during the Seventh Plan. In most of the emerging thrust areas of the electronics industry which include basic technology (materials), power semiconductor devices and equipment, electro-optics, real-time systems and instrumentation, defence electronics and communication, there is a possibility of shortage of manpower during the Seventh Five Year Plan period and beyond. For being able to provide the necessary manpower for this industry, the following measures will have to be taken: strengthening of institutions/universities and other training centres engaged in imparting training in advanced technologies in electronics; augmenting on-the-job training facilities of some of the production agencies to cater to the training of the larger electronics community; setting up of advanced training centres; upgrading of most of the existing telecommunication training centres and giving emphasis to methods of training oriented towards conversion of laboratory know-how to production-oriented know-how.

5.23 The manpower requirements of the energy sector are varied. For instance, there is need for the development of manpower to design, erect, operate and maintain the super-thermal power projects. The initial training of personnel must be supplemented by post-employment training to the employed personnel with a view to upgrading their skills on a continuing basis. Emphasis should be given to trained manpower to carry out research and development work under the new energy sources programmes. With a view to continuing the efforts already undertaken for the exploitation of the ocean wealth, encouragement must be given to scientific and technical personnel to carry on research and development in areas like ocean engineering, offshore oil exploration, marine instrumentation, diving and underwater technology, harnessing energy from the sea, remote sensing technology related to the oceans arid oceanographic data processing and storage.

5.24 Considering the importance of the growth of relatively backward areas and hill/tribal areas, special measures are required for attracting and developing the required manpower for these areas in the critical sectors. Emphasis on training with local bias has to be given in the ITIs and vocational training institutes in these areas. Apart from the enforcement of compulsory education upto the middle school level, traditional crafts/skills relevant to the local conditions can form part of primary and middle level education in these areas. To enable the population to pursue higher education and avail themselves of ITIs and other institutions it would be necessary to establish them in the neighbourhood of hill/tribal areas. In the selection of trades for the ITIs already located/envisaged to be located in hill/tribal areas, collaboration with Institutes like lTDA^ and the Tribal Development Corporations would be helpful. The setting up of Agricultural Training Institutes or Horticultural Training Institutes in preference to ITIs could also be considered for these areas. In order to handle various programmes earmarked for these areas effectively, it would be useful to open Career Guidance Cells in each ITDA office. Similarly, manpower planning for Scheduled Castes and Scheduled Tribes should be oriented to enable them to avail themselves of the reservation quotas for jobs in various professional fields.


5.25 The thrust of the Seventh Plan is on improvement in capacity utilisation, efficiency and productivity. Labour enters the production process from the supply side as well as from the demand side. The focal point for both aspects is higher productivity because it is through higher productivity that higher real wages can be ensured, cost of production can be brought down and higher demand for products can be generated, which would lead to further growth. The role of labour has to be perceived in this broad perspective.

5.26 The success of labour policy has to be adjudged on the basis of the productivity standard that it helps the economy to achieve. While technical factors and the state of technology are crucial in determining productivity levels, there is no gainsaying the fact that discipline and motivation of workers, their skill, the state of industrial relations, the extent and effectiveness of participation of workers, the working climate and safety practices are also of great importance. While maximising employment generation, requisite attention has to be directed to the improvement of labour productivity through the adoption of up-to-date technology in productive processes in major sectors and corrective measures for industrial sickness.

5.27 One of the serious problems in the industrial sector is sickness. With greater competition, a large number of units may become unviable than in a protected market. There is the problem of chronically sick units both in the public and the private enterprises not only in the traditional industries like jute and textiles but also in enterprises established after Independence. Therefore, from time to time there arises the problem of rehabilitation of large numbers of workers in the organised sector. A sound policy of tackling industrial sickness in future has to be evolved which while protecting the interests of labour would also take into account the fact that Government cannot bear the huge burden of losses.

5.28 There is considerable scope for improvement in industrial relations which would obviate the need for strikes and the justification for lockouts. In the proper management of industrial relations, the responsibility of unions and employers has to be identified and inter-union rivalry and intra-union divisions should be avoided.

Upgradation of Quality of Training

5.29 Productivity is greatly dependent upon the quality of training imparted to the workers at different levels. While on the one side there is a great demand for the seats in the ITIs, many trained craftsmen are on the live register of the employment exchanges. Absorption of trained craftsmen is related to the quality of training. Training has to suit the requirements of industry and has to be of the best quality. This will also help in quality output of industrial goods and raise their competitiveness both in domestic and international markets. A problem which affects the quality of training is the use of obsolete equipment and machinery in the ITIs. There is, therefore, urgent need for modernisation of the ITIs. In view of the number of ITIs to be covered, this has to be taken up in phases, covering in the first instance the ITIs which are relatively old.

Industrial Safety

5.30 Yet another important area is industrial safety requiring constant attention due to its significant impact on the working conditions and welfare of the workers and also on the production mechanism. Safety in the work place is related to several factors like the state of the machinery, maintenance, protective/preventive arrangements, training of workers in the proper handling of the machinery, safety practices, concern of the management and effective supervision. As the technology changes are fast and production processes get diversified, promotional services in this area would have to include survey, research, training and other supportive services. Ensuring of industrial safety involves technical appraisal and therefore, factory inspection has to be carried out by technically competent and trained staff. Arrangements for industrial safety have to be made foolproof through better vigilance, proper identification of hazardous industries and development of expertise for inspection and enforcement. Industry should also recognise its due responsibility in this matter.

Employment Exchanges

5.31 Tackling the problem of unemployment requires not only the generation of productive job opportunities but also coaching, guiding and counselling the trained manpower and specially certain target groups like women and the physically handicapped in respect of vocational choices and placement. In this regard the employment exchange machinery has to play a more effective role both in respect of wage employment and self-employment. The functioning of the pilot scheme introduced in the Sixth Plan for strengthening the employment exchanges/ University Employment Information and Guidance Bureau for the promotion of self-employment will have to be evaluated while drawing up the future course of action in respect of measures for self-employment promotion.

Wage Policy

5.32 An important aspect of labour policy pertains to the formulation of an appropriate wage policy. The basic objectives of wage policy are a rise in the levels of real incomes in consonance with increases in productivity, promotion of productive employment, improvements in skills, sectoral shifts in desired directions and reduction in disparities. Wage employment and the scope for its further increase may be relatively limited; but in the organised sector, the wage factor, including within its scope related elements like allowances, bonus, social security and fringe benefits, assumes enormous importance for many economic and practical reasons.

Unorganised Labour

5.33 Labour policy should necessarily have provisions for the welfare and working and living conditions of unorganised labour not only in the rural sector, but also in the urban areas. Although a great majority of unorganised labour is found in the rural areas, an increasing number of workers are shifting to the metropolitan cities and small and medium towns in search of better employment opportunities. In the unorganised urban sector, incomes are not protected, legal regulations of employment and wages are almost non-existent and it is extremely difficult to enforce the rules where they exist. The effective implementation of the existing legislation, particularly the Contract Labour (Regulation and Abolition) Act, 1970, the Minimum Wages Act, 1948 and the Inter State Migrant Workmen (Regulation of Employment and Conditions of Services) Act, 1979, would greatly improve matters for the unorganised urban workers. Additionally, the policy package for the informal sector should have the following ingredients: (i) the provision of minimum infrastructural facilities, (ii) increased ancillarisation, (iii) assured supply of raw materials and spare parts and credit facilities, (iv) technological Upgradation and training, (v) establishing linkages with the formal sector and (vi) exploring new marketing opportunities for the products of the informal sector.

5.34 The rural unorganised labour includes the landless labourers and small and marginal farmers, share croppers, rural artisans, forest labour, fishermen and persons engaged in self-employment like beedi workers, leather workers and handloom workers. Apart from the general problem of unemployment, rural labour faces problems of under-employment, low wages, lack of education and organisation. A number of schemes are already being implemented to improve the living and working conditions of rural workers in the country. The transformation of their socio-economic conditions is admittedly a challenging task demanding commitment, dedication and hard work. As the basic malady afflicting the rural unorganised workers has been the lack of employment opportunities, particularly during the slack seasons, emphasis would continue to be placed on the special target group programmes for employment creation and income generation. Efforts would be made not only to train and upgrade the skills of the workers but also to educate them and make them aware of the programmatic and legislative provisions available for them. Genuine and effective voluntary organisations would be involved in the process of organising the poor and in actual implementation of the schemes.

Bonded Labour, Child Labour and Women Labour

5.35 An extreme manifestation of the sorry plight of rural unorganised labour is the bonded labour system. The conditions which have created it have to be rooted out in order to prevent relapse. Extreme poverty, total lack of skill or assets, iniquitous social customs, the state of helplessness of a large number of these people and their dependence on the private money-lending system are the causes which have led to this situation. It is an important social obligation to see that the law on the subject is enforced and the freed bonded labourers are rehabilitated. An Evaluation Report of the Programme Evaluation Organisation on the rehabilitation of bonded labourers has made a number of important suggestions such as the provision of protective measures, making the bonded labourers aware of the programme, the need for continuous identification and the possibility of a programme of group rehabilitation.

5.36 Another segment of labour market which deserves immediate attention is child labour. Since it is not feasible to eradicate the problem of child labour at the present stage of economic development, attention has to be focussed on making the working conditions of child labour better and more acceptable socially. Improved legislation coupled with better enforcement machinery are called for. Association of voluntary organisations and agencies with the tasks of providing child workers with health care, nutrition and education will be desirable. Efforts can be made to bring non-formal education to child workers in the large numbers of small factories and workshops in which they labour. The ultimate goal of abolition of child labour can only be achieved when there is sufficient improvement in the conditions of the families whose children are compelled to work.

5.37 As for women labour, they have to be given special recognition and provided with the requisite facilities for bringing them into the mainstream of economic growth. In this regard, the major tasks are: (i) to treat them as specific target groups in all rural development programmes; (ii) to ensure that in all asset endowment programmes, women have rights over assets and resources; (iii) to properly diversify vocational training facilities for women to suit their varied needs and skills; (iv) to encourage appropriate technologies, equipment and practices for reducing their drudgery and increasing their productivity; (v) to provide creche facilities and family planning centres; (vi) to establish marketing estates at the State level; (vii) to increase women's participation in trade unions and in decision making; and (viii) to improve and enlarge the scope of the existing legislation for women workers.


5.38 In the light of the foregoing discussion, but keeping in view also the overall constraint of resources, a plan allocation of Rs. 334 crores for the Centre, the States and the Union Territories has been provided for the Seventh Plan. The outlay and the anticipated expenditure in the Sixth Plan and the proposed outlay for the Seventh Plan for the Centre, the States and the Union Territories are given below:

Plan-Outlay and Expenditure—Labour and Labour Welfare
(Rs. in crores)

  Sixth Plan Proposed Outlay for the Seventh Plan
Outlay Anticipated expenditure
Centre 78.50 39.06 95.44
States 111.92 148.55 219.75
Union Territories 9.22 12.38 18.53
TOTAL 199.64 199.99 333.72

5.39 This allocation provides for certain new Centrally-Sponsored Schemes (vide Annexure 5.3), viz., (i) up-gradation of State Government ITIs for improving the quality of training and replacement of obsolete machinery;(ii) grant-in-aid to State Governments for establishing women ITIs; (iii) Central assistance for upgradation of ITIs in minority concentration areas; (iv) work of monitoring environment in hazardous chemical industries in the States and Union Territories; (v) grant-in-aid to voluntary agencies for identification of bonded labour, and also for projects for improvement of the conditions of child labour through a package provision of non-formal education, health care, nutrition and recreation.

Usual Status Unemployment Rates by Residence, Sex and Age-group during 1983 —NSS 38th Round (Jan-June 1983)

Sl. No. Age-Group Rural Male Rural Female Urban Male Urban Female Rural Urban Male Female All
1 2 3 4 5 6 7 8 9 10 11
1. 5-14 2.62 1.50 8.93 2.77 2.17 6.79 3.37 1.63 2.68
2. 15-29 5.06 3.37 12.46 17.68 4.54 13.39 6.97 5.43 6.54
3. 30-44 0.63 0.71 1.29 2.60 0.66 1.51 0.81 0.98 0.86
4. 45-59 0.33 0.57 0.94 1.43 0.40 1.03 0.47 0.69 0.53
5. 60 + 0.40 0.99 1.07 0.20 0.52 0.88 0.51 0.85 0.58
6. All ages 2.32 1.76 5.95 8.14 2.15 6.35 3.20 2.65 3.04

Note: The rates are percentage of unemployed to the corresponding labour force.

Estimates of Stock of Educated Manpower and Economically Active Educated Manpower at the  beginning of the years 1985 and 1990 and addition to the economically active persons during 1985-90
(Figures in 000's)

Sl. No. Educational Category At the beginning of 1985 At the beginning of 1990 Addition to the Economically action population during 1985-90
Stock of manpower Economically active population (i.e. labour force) Stock of manpower Economically active population (i.e. labourforce)
1 2 3 4 5 6 7
1. Engineering Degree Holders (B.E.)* 372.6 324.2 454.4 395.3 71.1
2. Medical Graduates (M.B.B.S.)' 258.7 225.1 302.4 263.1 38.0
3. Dental Surgeons (B.D.S.)* 9.5 8.3 12.0 10.4 2.1
4. Nurses (B.Sc.) 3.7 3.7 5.5 5.4 1.7
5. Agricultural Graduates (B.Sc. Agri.)* 133.3 104.0 162.8 127.0 23.0
6. Veterinary Graduates (B.V.Sc.)* 28.3 24.6 33.4 29.1 4.5
7. Arts Graduates (B.A.) 2553.0 1991.3 3169.6 2472.3 481.0
8. Arts Post Graduates (M.A.) 1440.9 1123.9 1951.1 1521.9 398.0
9. Science Graduates (B.Sc.) 1138.3 887.9 1339.4 1044.7 156.8
10. Science Post Graduates (M.Sc.) 350.3 273.2 419.7 327.4 54.2
11. Commerce Graduates (B.Com.) 1226.1 956.4 1590.6 1240.7 284.3
12. Commerce Post Graduates (M.Com.) 207.4 161.8 302.7 236.1 74.3
13. Education Graduates (B.Ed.)* 1122.7 875.7 1379.4 1075.9 200.2
14. Other Graduates 88.3 68.9 131.3 102.4 33.5
TOTAL GRADUATES AND ABOVE 8933.1 7029.0 11254.3 8851.7 1822.7
15. Engineering Diploma Holders 564.2 490.9 734.8 639.3 148.4
16. Matric/Higher Secondary Passed 38226.4 23318.1 52400.1 31964.1 8646.0
TOTAL EDUCATED 47723.7 30838.0 64389.2 41455.1 10617.1

'These include postgraduates also.

Outlays: Labour and Labour Welfare (Central Sector)
(Rs. in lakhs)

Sl. Name of the Scheme
i. Central Schemes  
1. Training 2400
2. Employment Services 580
3. Labour Welfare 2794
TOTAL—1 5774
ii. Centrally Sponsored Schemes
1. (a) Rehabilitation of Bonded Labour 1500
(b) Grant -in-aid to voluntary agencies 100
2. Organising Rural Workers 80
3. Strengthening of enforcement machinery for implementation of Minimum Wages in Agriculture 200
4. Upgradation of State Government ITIs for improving quality of training 1704
5. Grant-in-aid to the State Governments for establishment of Women ITIs 60
6. Central assistance for upgradation of ITIs in minority (other than SC/ST) concentration areas of 13 States 20
7. Strengthening of facilities and services for monitoring work environment in hazardous chemical industries in States/UTs 106
TOTAL—11 3770
GRAND TOTAL (Central and Centrally Sponsored Schemes) 9544
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