There have been some alarming signs of increasing unemployment in India from past few years with jobs created in labor intensive sectors going down to 1.35 lac in 2015 from 9.5 lac in 2011 and unemployment rate going up to whopping 5% in 2015 from 3.5% in 2011. These signs have certainly caught an eye of policy makers who are planning to address the issue through increased economic growth.
But sheer economic growth can’t be envisaged as the panacea for unemployment. Economic growth can be achieved by either creating more industries which will create new jobs or improving the productivity of the existing industry, which won’t necessarily create new jobs.
What policy makers need to focus on is to shift labor from informal sectors such as agriculture to more formal sectors like manufacturing. Though this solution is not without it’s reservations, countermeasures like labor reforms can aid to accomplish this goal.