Indian Economic Development Chapter 6 Employment Growth Informalisation and Other Issues VBQs Set 02

Reason-based Questions

Read the following statements carefully. Write True or False with a reason.

Question. Urban unemployment is a spillover of rural unemployment.
Answer: True. Reason: Owing to the lack of opportunities of employment, people in the rural areas are compelled to migrate to the urban areas in search of livelihood. This compounds the problem of urban unemployment.

Question. Poverty leads to low wages.
Answer: True. Reason: Poverty (particularly in rural areas) compels the people (particularly the female workers) to accept 'low-wage jobs'. The compulsion arises on account of these facts: (i) the female workers (owing to their illiteracy and social constraints) are averse to migrate to the urban areas for better jobs, and (ii) poverty is a compelling force for the woman in rural areas to supplement their family income even when they are to accept low-wage jobs.

Question. Disguised unemployment lowers efficiency/productivity.
Answer: True. This is absolutely true that disguised unemployment lowers efficiency/productivity. As a matter of fact, disguised unemployment is defined as a situation when marginal productivity of labour is zero or negative.

Question. Unemployment is a loss of potential output.
Answer: True. Because, unemployment implies inability to use the existing manpower. GDP level would definitely be much higher if all those who are able to work and willing to work are actually engaged in work.

Question. Primary sector is an important source of labour supply to the secondary and tertiary sectors of the economy.
Answer: It is true that the primary sector is an important source of labour supply to the secondary and tertiary sectors of the economy. Reason: When productivity rises in agriculture (owing to the use of innovative technology), less labour is needed to produce a given level of output. Thus, labour is displaced in the primary sector. It is this labour which migrates to the urban areas, finding jobs in the secondary and tertiary sectors.

Question. Unemployment and poverty are reflections of each other.
Answer: True. Because, unemployed people do not earn wages or salaries. Thus, poverty is the obvious consequence of unemployment.

Question. Economic activity means production activity.
Answer: False. There is a difference between production activity and economic activity. It is like this: economic activity relates to the use of scarce resources. It includes: (i) production activity, (ii) consumption activity, (iii) activity of investment, and (iv) activity of exchange. Thus, production activity is only an element of economic activity. In other words, while all production activities are economic activities, all economic activities are not production activities.

HOTS & Applications

Question. Women in rural areas are ready to work even at low wages. Why?
Answer: This is because of two reasons:
(i) There is widespread poverty in rural areas. Poverty compels the women in rural areas to accept low-wage occupations.
(ii) Women in rural areas are averse to migration. They are reluctant/unwilling to migrate to urban areas for jobs. Owing to the lack of education, they are not even capable of finding jobs outside rural areas. Accordingly, they prefer to be engaged in farm and non-farm activities, but in the rural areas only.

Question. Unemployment in India is stubborn (almost permanent in nature) while in developed countries (like USA) it is cyclical. Why?
Answer: Unemployment in India is stubborn, because it is related to the lack of production capacity in the economy. Production capacity is lacking because of the lack of capital. The problem of lack of capital is a long period problem, and therefore, stubborn in nature. In developed countries like USA, unemployment is largely related to the lack of demand. Lack of demand is not stubborn, but cyclical in nature. Which is why the problem of unemployment in these countries is cyclical in nature.

Question. A modest transformation in occupational structure of India only points to its modest achievement in the area of growth and development. Do you agree?
Answer: Between the years 1950-51 to 2017-18, percentage of workforce engaged in primary sector has declined from 72.7 per cent to 43.8 per cent. This is notable, but not a significant shift. Indeed, from the view point of growth and development, this can be termed as a modest shift. In no way, does it demolish the supremacy of agricultural sector in the Indian economy. This also points to the fact that the secondary and tertiary sectors have failed to generate ample opportunities of employment, because of their deficient growth and development. Indian economy is yet to take off as an industrial economy, absorbing the bulk of labour force.

Question. There are several examples in the rural areas of India where there are more workers in the family but gross income of the family is low. How do you explain this paradox?
Answer: Such situations are often found among poor families in the rural areas. Most working members of these families are unskilled casual workers, working on the fields and farms of others. Owing to the lack of skill (along with the fact that there are limited job opportunities), these workers are often paid low wages. It is low wage (or subsistence wage) that compels most members of the family (including women and children) to engage themselves in some kind of work so that they can cope with their subsistence needs. Working at the subsistence wage rate leads to low gross income of the family.

Analysis & Evaluation

Question. How do you evaluate 'Start-ups' in India as a solution to the problem of unemployment? Write two observations.
Answer: (i) 'Start-ups' are expected to generate opportunities of self-employment, and are therefore, solution to the problem of unemployment.
(ii) 'Start-ups' are to be aided with technical and financial support by the government. Accordingly, these are expected to encourage the use of latent resources (particularly entrepreneurial skill and small savings). When latent resources are used, employment opportunities are bound to arise.

Question. Empowerment of women is related to employment of women. Comment.
Answer: It is since ages that the women have suffered gender-discrimination. Men have been getting priority in matters relating to education, health, inheritance, marriage and policies. Empowerment of women aims at achieving gender equality. Of all the measures related to empowerment of women, employment of women is of central significance. Employment makes the women economically independent. This enhances their ability as decision-makers in all walks of life. Once the women are independent decision-makers, they can always strive for gender equality. It is, therefore, required that the participation of women (as a workforce) is raised, particularly in secondary and tertiary sectors of the economy.

Question. There is a mismatch between 'GDP growth' and 'employment growth' in India. How do you justify this statement?
Answer: GDP growth in India happens to be faster than employment growth. In other words, even when production activity is expanding, job opportunities continue to be low. This is a situation of 'jobless growth'. This occurs when we rely more and more on labour-saving western technology. Such a technology (using more of capital and less of labour) does not suit the needs and means of a country where unemployment is an alarming social challenge. But, given the fact that the country lacks investment capital, we are forced to depend more and more on FDI (foreign direct investment). Foreign investment in India is linked with foreign technology which is efficient but the one which uses less and less of labour. Reliance on FDI cannot be minimised. Implying that the reliance on labour-saving western technology cannot be minimised. Accordingly, a mismatch between 'GDP growth' and 'employment growth' cannot be so easily corrected.

Question. GDP in India is growing but unemployment stays to be a serious issue. How do you reconcile these facts?
Answer: Despite a rise in GDP, unemployment continues to stay as a serious issue owing to the following reasons:
(i) Owing to rising population, labour force continues to rise at an alarming rate.
(ii) Education and employment of women in India is no longer a social taboo. This has led to a significant rise in the labour force.
(iii) Strategy of growth is such that we are relying more on the western technology which is labour-saving.
Briefly, a significant rise in the supply of labour on the one hand and a significant reliance on the western technology, on the other hand, has led to GDP growth without a significant conversion of labour force into workforce. Hence, unemployment stays to be a serious issue.

NCERT Questions 

Question. Who is a worker?
Answer: A worker is an individual who is in some employment to earn a living.

Question. Define worker-population ratio.
Answer: Worker-population ratio is defined as the number of persons employed per thousand persons.
\( \text{WPR} = \frac{\text{Number of employed person}}{\text{Total population}} \times 1,000. \)

Question. Are the following workers—a beggar, a thief, a smuggler, a gambler? Why?
Answer: Beggars, thieves, smugglers or gamblers are not workers because they are not in any employment to earn a living and are not generating any kind of factor income.

Question. The newly emerging jobs are found mostly in the ________ sector. (service/manufacturing)
Answer: Service.

Question. An establishment with four hired workers is known as ________ sector establishment. (formal/informal)
Answer: Informal (informal sector includes those establishments which hire less than 10 workers).

Question. Compared to urban women, more rural women are found working. Why?
Answer: Compared to urban women, more rural women are found working. This is because in rural areas, poverty compels women workforce to seek employment. Thus, employment (even without education) is a priority. In urban areas, on the other hand, high priority for education implies low priority for jobs at an early age.

Question. Meena is a housewife. Besides taking care of household chores, she works in the cloth shop which is owned and operated by her husband. Can she be considered as a worker? Why?
Answer: Being a housewife, Meena is merely a helping hand to her husband in his cloth shop. She is not to be considered as a worker.

Question. Find the odd man out (who is not a worker): (i) rickshaw puller who works under a rickshaw owner, (ii) mason, (iii) mechanic shop worker, (iv) shoeshine boy.
Answer: Shoeshine boy because he is self-employed, all others come under the category of worker.