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Indian Economic Policy

Notes The basic message of the Approach Paper was that total employment requirement would be 100
million in the 11 Plan (65 million new entrants plus 35 million backlog). In case, 65 million new
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employment opportunities are created during the 11 Plan, then the same backlog of unemployment
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(35 million) will be left at the end of the 11 Plan.
Table 6 : Sectorwise Generation of Additional Employment
Additional Employment (Million)
Tenth Plan Projected for
Achievement Eleventh Plan
(2000-05) (2007-12)
Agriculture 8.84 0.00
Mining and Quarrying 0.17 0.00
Manufacturing 8.64 11.94
Electricity, water etc. 0.18 0.02
Construction 6.44 11.92
Trade, Hotels & restaurant 10.70 17.40
Transport, storage & communication 4.04 9.02
Finance, insurance, real estate & business services 3.12 3.43
Community, social & personal services 4.59 4.34
Total 46.71 58.07
Source : Planning Commission (2007), Eleventh Five Year Plan (2007-2012)

The Planning Commission has now reduced the estimate of new entrants to the labour force from
65 million to 45 million — a drastic reduction by 20 million in the estimate of the labour force. Even
when the Planning Commission has now estimated the target of additional employment to a lower
level of 58 million opportunities, it has been able to bring the backlog of unemployed at the end of the
11 Plan to 23-24 million and bring about a reduction in the rate of unemployment from 8.36% in
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2006-07 to 4.83% in 2011-12. What else is this but statistically jugglery!
Another issue which has evaded the Planning Commission is : What strategy should be adopted to
increase the wage share in organized sector when it has itself admitted that “it has halved after the
1980’s and is now among the lowest in the world.” Similarly real wages stagnated or declined even
for workers in organized industry, although managerial and technical staff did secure large increase.
Since inclusive growth implies that the growth process should benefit the low paid workers and
provide decent work, what we observe is that growth process in industry and even in services, is
helping only managerial and technical staff securing large increase in their emoluments, but the
workers are left high and dry. The Planning Commission has elaborated the social security measures
being introduced by the Government, but they help only marginally on account of the large labour
force in the country.

The major sources of employment generation in the Eleventh Plan are trade, hotels
and restaurants (17.4 million), manufacturing (11.94 million), construction (11.92
million) and transport, storage and communications (9 million).

The fact of the matter is that profits of enterprises in the organized sector are rising fast, and wage
share is declining. The Planning Commission has not applied its mind to generate a process by which
wage share in organized sector should improve. Failure to do this will mean ‘growth for the few’ or

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