Combatting the Unemployment Crisis
Notwithstanding the V-shaped recovery of the Indian economy, the unemployment problem is threatening to snowball into a serious crisis. As per the latest CMIE report, the unemployment rate now stands at 8.49 per cent; while the unemployment rate in rural areas is 8.82 per cent, the said rate is 7.76 per cent in urban areas. The figure highlights that no new jobs have been created since the beginning of the pandemic. Sensing the gravity of the situation, economists have urged both the public and private sector to take effective measures to bring down the unemployment rate in the country. But generating employment has become quite a difficult task in the present financial scenario owing to several factors. Firstly, the world economy is yet to recover fully from the jolt it received during the outbreak of the pandemic. Secondly, uncertainty is prevalent worldwide due to the ongoing Russia-Ukraine war, which has been continuing for four months. And lastly, the entire world is in the grip of high inflation and price rise. The domestic situation too is not looking bright. India’s unorganised sector is fighting for survival as it has been severely impacted by the Covid-19 pandemic. Micro, medium and small scale enterprises (MSME) are finding it difficult to balance between high production costs and the pressure to keep selling price within an affordable range for customers. The crisis is so severe that the market share of MSME has shrunk more than 25 per cent. It has become difficult for this sector to receive bank loans due to the prevalent market situation. Several states have made appeals to banks to ease some of the criterions in-order to allow MSMEs to become eligible to get loans.
The best way to solve the unemployment problem is to make new investments in both public and private sectors, and create jobs for the youths of the country. Before the introduction of the new economic policy in the nineties, public sector units were the best option for the unemployed youth of the country. But no new public sector unit is coming up now and simultaneously the government has sold many such units due to unprofitability. Moreover, many government jobs in various departments are lying vacant with no recruitment made in the last two years. The vacancies should be filled up at the earliest to bring the unemployment rate down. Here, more than the public sector, the private sector has a crucial role to play in this hour of crisis. It is a fact that the private sector has equally been affected by the pandemic as the public sector, but that should not deter it from making new investments as the government has already provided aid and incentives to this sector including tax rebate. It was expected that the private sector would make new investments with that excess amount, which in turn would create new jobs. So, it’s time for the private sector to take the lead in providing employment to the unemployed youths of the country.