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: Schemes: TWRFS and RGSKY
Mains level: Understanding the phenomenon of unemployment in the economy
- The article elaborates on the series of job losses witnessed by the economy in multiple sectors in the last 2 years.
- The author has tried to collate data from various ministries and has tried to connect the dots.
The main reason for job losses is following-
- There is hardly any growth in private investment, private consumption and exports. The growth in economy is fuelled by government spending only.
Scenario in textile sector-
- Exports and production is down due to slump in both external and domestic demand
- Demonetisation and transition to GST has hit small players
- Labour issues and cost of production is also causing structural issues in the sector
- Most of the units that have been shut in the sector belong to power loom textile
- The government does not capture data from the small and medium scale textile sectors, hence the distress in these areas is not visible.
- Capital goods firms are struggling as most of the downstream sectors are saddled with excess capacity and low demand.
- Labour bureau’s Quarterly Employment Surveys (QES) are also showing downslide in employment growth because of the layoffs in IT/BPO and financial services sector, which were earlier the key drivers of growth in these surveys.
Textile Workers Rehabilitation Fund Scheme (TWRFS)
- The scheme was introduced in the year 1986
- Aim: to provide relief to workers rendered jobless due to permanent closure of non-SSI (Small Scale Industry) textile mills in private sector
- Relief: workers who have suffered job loss are given wages for three years on tapering basis
- This scheme has been merged under Rajiv Gandhi Shramik Kalyan Yojana in 2017
Rajiv Gandhi Shramik Kalyan Yojana (RGSKY)
- Introduced in 2005
- This is an unemployment benefit scheme when the unemployment is caused due to closure of a factory or permanent invalidity arising out of non-employment injury
- The unemployment benefit is provided for the period of 12 months
- This also covers medical care for the beneficiary and the beneficiary’s family
- New Economy and Old Economy:
Old Economy includes industries embedded in the industrial revolution and the mass production of physical goods. Eg Energy, automobile, steel etc
New economyis the result of the transition from a manufacturing-based economy to a service-based economy. Eg. IT and IT-es industry
- Capital goods are goods that are used in producing other goods
- Meaning of excess capacity and low demand: when a factory is not utilising its full capacity due to low demand then there is bound to be stress in the sector
- Private Investment: the investment coming in from private players in the economy to purchase assets eg. Roads built by private players, spectrum sale etc
- Private consumption: it is the consumption of goods and services by private households.