Mains Paper 3: Indian Economy: Indian Economy and issues relating to planning,mobilization of resources, growth, development and employment
From UPSC perspective, the following things are important:
Prelims level: The trends in labour participation rate and unemployment rate
Mains level: Challenges of Development and Employment
1. The article talks about the fall in labour participation rate post-demonetisation as per the Centre for Monitoring Indian Economy(CMIE)
2. The central idea of the article is follows: A comparitive approach of the labour participation rate, unemployment rate and volatility of unemployment in the 10 months preceding and post demonetization.
Key trends in labour market post demonetization-
1. About 2 million jobs were lost between January and August 2017
2. The average labour participation rate during the 10 months preceding demonetisation was 47% which decreased to 44% during the 10 months following demonetisation
3. The immediate impact of GST has been less severe compared to demonetisation.
4. Labour participation was at its lowest in July 2017 but increased in the following months.
5. Demonetisation had a wealth distribution element which cushioned the impact of demonetisation on job losses
6. Monthly overall unemployment rate has been increasing steadily since August 2017 from 4.11% to 5.68% in October 2017
7. Overall employment rate showed a decline from September 2016 to April 2017. However it picked up from May 2017
8. Urban unemployment rate was 8.2% which was the highest recorded employment rate in the past 11 months
9. The rise in labour participation and unemployment rates indicate that although labour is entering the market, they are unable to find jobs.
10. The volatility of unemployment rate measured through the coefficient of variation increased from 8.8% in Jan-Oct 2016 to 23.5% in Nov 2016-August 2017
11. The volatility of unemployment in India was 8.3 times higher than in OECD countries in the overall 20-month period
1. Organisation for Economic Cooperation and Development(OECD)
– It is an intergovernmental economic organisation to stimulate economic progress and world trade
– Its headquarters are located in Paris, France
– India is not a member
1. Demonetisation: It is the act of stripping a currency unit of its status as legal tender
2. Labour Participation Rate: It refers to the number of people who are either employed or actively looking for employment
3. Unemployment Rate: It is the number of unemployed people as a percentage of the labour force