Page 37 - DECO502_INDIAN_ECONOMIC_POLICY_ENGLISH

Unit 3: Eleventh Five Year Plan

Table 5 : Projected Growth of Population, Labour Force and Employment Notes

2004-05 2006-07 2011-12
to to to
2006-07 2011-12 2016-17

Growth rate in population 1.43 1.37 1.22
Growth rate in labour force 2.02 1.96 1.62
Growth rate in employment 1.98 2.73 2.42
Additions to labour force (million) 19.3 44.7 40.4
Additions to employment opp. (million) 17.3 58.1 57.9
Average additions to employment per year (million) 8.6 11.6 11.6

Eleventh Plan will be of the order of 23-24 million. Consequently, the rate of unemployment will
decline from 8.36% in 2006-07 to 4.83% in 2011-12. Similarly, another 58 million employment
opportunities will be created in the Twelfth Plan and as a consequence, the backlog unemployed will
get further reduced to merely 6 million. The rate of unemployment will fall still further to 1.12% in
2016-17. If the projections and the actual realizations are achieved as per schedule, India will attain a
state of full employment by 2016-17. But the Planning Commission is itself not sure of its labour force
projections and employment generation capacity of the economy. To safeguard itself, it mentions :
"There are important qualifications to these projections which must be kept in mind, arising from the
limitation of employment elasticity as a projection tool. The concept of employment elasticity is at
best a mechanical device to project employment on the basis of projected growth of output and past
relationships between employment and output. These relationships can change as a result of changing
technology and change in real wages. The labour force participation rate is also subject to changes
especially because of possible changes in female participation rates in urban areas associated with
advances in women’s education. For all these reasons, the projected decrease in unemployment rate
must be treated with caution.”
Table 6 presents data about additional employment opportunities created in agriculture during the
Tenth Plan, the Eleventh Plan contemplates zero additional employment. To assume zero employment
elasticity in agriculture when the rate of GDP growth in agriculture is sought to be stepped up from
2% to 4%, is to say the least, preposterous. This is more so when the Eleventh Plan itself recommends
encouragement to employment generating sectors in the economy. If 8.84 million employment
opportunities could be generated in the Tenth Plan in agriculture, it pass one’s comprehension why
the same order of employment opportunities, if not more, be generated during the Eleventh Plan,
more so when its growth rate is to be doubled. Agriculturally backward states like Bihar, Orissa,
Chhattisgarh. Rajasthan and Uttar Pradesh can certainly create more employment opportunities via
extension of irrigation and watershed development. If the target of additional employment in
agriculture had been kept at the same level as in the Tenth Plan i.e. 8.8 million, the employment
generation in the Eleventh Plan would have reached the level contemplated by the Approach Paper
(65 million). It appears that the Planning Commission intends to develop agriculture via contract
farming and treating the corporate sector as the main source of agricultural growth. If that is so, it
goes against the philosophy of inclusive growth.
It would be worthwhile to compare this optimism moderated with a certain degree of caution along
with the observations made in the Approach to the Eleventh Five Year Plan (December 2006) : “On
the supply side, the labour force will increase by about 52 million during the 11 Plan if it grows at
th
the same rate as current projections of working age population. The increase could be much higher,
around 65 million if female participation rises at the pace observed during 1999-2005. Since the increase
will be over and above the present backlog of 35 million unemployed on a typical day. and since
inclusiveness requires a shift from agriculture to non-agriculture, we must plan for at least 65 million
additional non-agricultural opportunities in the 11 Plan.”
th

LOVELY PROFESSIONAL UNIVERSITY 31