4.32 The national perspective on work opportunities presented above has been prepared on the macro-economic considerations of output and income, saving and investment, trade and balance of payments as developed in Chapter 2, and on demographic and labour force trends at the national level. It therefore seeks to balance aggregate labour force against work opportunities in a macro-economic framework. However, there are substantial demographic, economic and social variations across the States, and also within the large States, such that the National level perspective may give rise to implications for employment planning that could be at variance with the regional realities and differ substantially between the States. Though with the existing state of regional economic information base, it is not possible to repeat the National level analysis at the level of States, the available region level detail can be utilised to discern certain serious concerns, which may be suppressed in the macro exercises, and that should be addressed by the planning process.

4.33 A regional perspective on employment has been attempted under the assumption of a uniform step up of economic growth across all States, which indicates variations in development of employment situation in the Ninth Plan period.The balance between labour force and work opportunities in Ninth Plan is expected to improve in the States of Andhra Pradesh, Assam, Gujarat, Haryana, Karnataka, Madhya Pradesh, Maharashtra, Orissa, and West Bengal resulting in a decrease in unemployment in these States. (Table 4.17). On the other hand, the States of Bihar, Kerala, Punjab, Rajasthan, Tamil Nadu, and Uttar Pradesh face the prospect of an increase in unemployment as labour force increases by more than the increase in work opportunities. Moreover, on top of the increased backlog of unemployment in the Ninth Plan, the expansion of labour force in the post-Ninth Plan period in the States of Bihar, Rajasthan and Uttar Pradesh is at an even higher pace than in the Ninth Plan. This makes the need for accelerating work opportunities in these States in the perspective period more acute.

4.34 Given the fact that agriculture contributes three-fourths of the jobs increase in these States, any attempt at improving the lot of workers in this sector has to be based on a reorientation of agricultural growth. The magnitude of workers in agriculture in these states is large; 69 to 74 per cent of workforce (Table 4.19). To absorb a substantial part of the agricultural workers in the secondary sector, in an alternative strategy of economic diversification, manufacturing and related services sectors in these States will require an order of step up in growth, that may not be feasible in a 10 to 15 year perspective. This sets the agenda for federal economic policies that influence the inter-state behaviour of agricultural growth. And, if the requisite reorientation of regional agricultural growth profile is not realised, the alternative is that the federal Planning Process would have to cope with, and indeed even facilitate, migration of workers from these regions, which in any case is already there but will accentuate in the medium term perspective. The reason being that if the problem of unemployment and underemployment is not tackled at places where the labour force originates, it transforms itself, at least partly, into the problems of migrant workers in the destination States. This is as much a problem of the destination States, as it is of the States where labour force originates, calling for mutually compatible policies between the two types of States with an important coordinating role for the Centre.

4. 35 The balance between labour force and employment opportunities will vary across the regions. Over the perspective period 1997-2012, labour force will be rising at an increasing or at a decreasing pace depending upon: (i) the time at which changes in fertility have occured in the respective States; and (ii) the need and willingness of people to participate in or withdraw from labour force. It is therefore possible to estimate the regional dispersion in the growth of the labour force on the basis of the available demographic data and State-specific LFPRs. As far as work opportunities are concerned, the problem is somewhat more difficult. While a regional employment growth profile consistent with the targeted aggregate and sectoral GDP growth in the Ninth Plan cannot be projected using the available data or the Plan model, it is possible to have some indication of trends in regional employment situation under certain specific assumptions. If the disparities in aggregate economic growth rates of each state relative to the growth rate of GDP is assumed to be the same as experienced during the period 1983- 1994, and further if quality of employment in terms of labour productivity continues to be the same, yielding stable relationships between the growth in state domestic products and creation of work opportunities, it is possible to estimate the pace of creation of work opportunities on a state-wise basis for the Ninth Plan period. Under these assumptions, the growth rates of the labour force and of work opportunities on a state-wise basis have been estimated and are presented in Table 4.16.

Table 4.16 : Employment Growth 1997-02 under assumption of unchanged trend in inter-state disparities in economic growth, and   Growth in Labour Force 1997-02 and 2002-07 - Major States.
----------------------------------------------------------------------------------------------
State                        Employment                     Labour Force Growth*
                               Growth under                    --------------------------------
                               the stated                      1997-2002        2002-2007
                               assumptions1
                               -----------------
                                 1997-2002
-----------------------------------------------------------------------------------------------
                        ( Per cent per annum )
-----------------------------------------------------------------------------------------------
All India      2.44            2.51        2.47
Andhra Pradesh 3.11            2.39        2.34
Assam          3.73            2.73        2.79
Bihar          1.29            2.58        2.85
Gujarat        2.53            2.37        2.18
Haryana        3.49            2.99        2.84
Karnataka      2.81            2.47        2.26
Kerala         1.26            2.30        1.90
Madhya Pradesh 2.61            2.39        2.48
Maharashtra    2.54            2.26        2.20
Orissa         2.35            2.10        2.13
Punjab         0.73            2.27        2.08
Rajasthan      2.71            2.84      2.91
Tamil Nadu     2.00            1.98        1.70
Uttar Pradesh  2.07            2.57        2.68
West Bengal    2.75            2.52        2.45
------------------------------------------------------------------------------------------------
Note :* Employment and labour force estimates on usual status basis.

4.36 The absolute change in the difference between the labour force and work opportunities in the different states is presented in Table 4.17. Of the 15 major states, 9 states are likely to experience a reduction in unemployment, while 6 states may witness an increase. In the event that some of the states which record a decline in unemployment may have an existing unemployment base of less than the decrease indicated, it would indicate that an excess demand for workers may exist, which could be met either through migration from other states or through increases in the remuneration to workers. It is unlikely, however, that the pattern of migration would be such as to entirely fill the supply shortages since migration depends not only upon the level of information available to the unemployed regarding employment opportunities, but also on the skill profile required by the receiving states. Such information is not readily available today, and every effort would need to be made to evolve a national clearing house for such information. Of the 6 states where unemployment in likely to increase, Punjab, Kerala and Tamil Nadu are special in the sense that the minimum wage in these states is much higher than most other States. The workers in these States expect better earning levels. A large proportion of the unemployed here can find better employment in other States given better skills and training. Better information availability may facilitate their movement. In the other three states; Bihar,Rajasthan and Uttar Pradesh; however, these conditions are unlikely to be fulfilled, and without active government intervention the recorded level of unemployment will rise. At the extreme, it is quite possible that chronic unemployment in the country could rise by almost 6 million during the Ninth Plan period, not because of a shortage of work opportunities to such an extent in the country, but due to a mis-match in the spatial pattern of job creation and labour force growth, on the one hand, and rigidities in labour mobility, on the other.

Table 4.17 :  Change in unemployment in Ninth Plan in States classified by 
              the trends in labour force and employment 
--------------------------------------------------------------------------------------
              characteristics

State Employment  Labour force  unemployment
 of labour force                 growth      growth
 and employment                  -----------------------   ----------------------------
                                        1997-02           9th Plan avg.  Change during 
                                                                           the Plan   
                                 -------------------------- ---------------------------
                                  (per cent per annum)              ('000 persons)
 ------------------------------------------------------- ------------------------------
 increasing unem-  Bihar             1.29      2.58           2414          2373
 ployment and      Rajasthan         2.71      2.84            281           186
 high labour       Uttar Pradesh     2.07      2.57           1976          1740
 force growth            
                                                                   
 increasing        Kerala            1.26      2.30          2389            912
 unemployment      Punjab            0.73      2.27          1065            783
 but low growth    Tamil Nadu        2.00      1.98           976             59
 of labour force    
 
 decreasing        Assam             3.73      2.73           -23           -441
 unemployment      Haryana           3.49      2.99           189           -160
 but high          West Bengal       2.75      2.52           467           -282
 growth of          
 labour force
                   Andhra Pradesh    3.11      2.39         -1093          -1487
                   Gujrat            2.53      2.37          -474           -221
                   Karnataka         2.81      2.47          -616           -476
  decreasing       Madhya Pradesh    2.61      2.39          -109           -400
  unemployment     Orissa            2.35      2.10           -23           -191
  and low growth   Maharashtra       2.54      2.26            -5           -568
  of labour force   
  -------------------------------------------------------------------------------

4.37 This shows that the the expected level of unemployment at all India will not be valid, if there is not a complete mobility of labour from one state to another. For that purpose, not only all barriers to free movement of labour need to be removed, but the movement be facilitated by providing incentives to establishments to receive workers from everywhere. If this is not done then, the alternative is to target at a sharper step up in growth of output in the three States.

4.38 If post Ninth Plan period (2002-07) employment growth, statewise, continues to be the same as in Ninth Plan and the labour force grows according to the projected statewise demographic profile then in some states there will be no backlog of unemployment, while in some there will be a level of unemployment which is higher than what is expected at the end of the Ninth Plan. This is presented in Table 4.18. The States which face prospect of a increase in unemployment in post Ninth Plan period (2002-07) are Bihar, Rajasthan, Uttar Pradesh, Kerala and Punjab. Of these, Bihar, Rajasthan and U.P. are the States where the labour force and employment growth differential widens more than in the Ninth Plan. On the other hand, most of the States where unemployment is likely to decrease during the Ninth Plan, under the stated assumptions, are also the States where growth of labour force will be decelerating in the post Ninth Plan period. There is, therefore, a strong prospect of increasing migration from the States listed in quadrant ( I ) of Table 4.18 to those in quadrant (IV). Any possibility of realising higher than the Ninth Plan period targeted growth of economy at 6.5 per cent per annum, either within the Ninth Plan or raising it later in the perspective period needs to be explored, with a much sharper regional focus, if existing conditions of employment in Bihar,Rajasthan and Uttar Pradesh are to improve. To the extent, it is not possible to reduce disparities in growth, it will be prudent that the planning process, with the consensus of the States concerned, provides either for facilitating migration of labour or a reorientation of the employment and anti-poverty schemes.

Table 4.18 : Changes in Unemployment and in Labour Force
in post Ninth Plan Quinquennium (2002-07)
                      ----------------------------------------------
                      Labour Force Growth in post Ninth Plan
                      Period (2002-07) compared to Ninth Plan (1997-2002)
                      ----------------------------------------------
                                    Accelerating           Decelerating
   ---------------------------------------------------------------------
                       Increasing   Bihar, Rajasthan,   Kerala, Punjab
    Unemployment                    Uttar Pradesh          (II)
    rate in                         (I)
    post Ninth Plan ----------------------------------------------------
    period                         Assam, Madhya       Andhra Pradesh,
    (2002-07) *       Decreasing   Pradesh,Orissa      Gujarat,Haryana,
                                     (III)             Karnataka,
                                                       Maharashtra,
                                                       Tamil Nadu,
                                                       West Bengal
                                                         (IV) 
    --------------------------------------------------------------------

Note: * Direction of change in unemployment in States is indicated under the assumption that the growth of employment in 2002-07 is the same as in Ninth Plan.

4.39 If, inspite of all efforts to improve the quality of the growth process both at the national and the regional level, it is found that the problem of unemployment remains untractable in the identified states, there is compelling logic to reorienting the government-sponsored employment programmes in favour of these states. As has already been noted, the problem of underemployment and disguised unemployment is present in greater or lesser degree in practically all the states of the country, and the growth process is unlikely to fully correct this phenomenon in any state during the Ninth Plan period. The appropriate instrument for addressing this specific issue is the EAS, which is designed specifically for the purpose. The more intractable problem of overt unemployment, however, will require additional interventions. It is suggested, therefore, that the other major programme of casual wage employment operated by the government, namely the Jawahar Rozgar Yojana (JRY), should be given greater regional focus and the available resources should be concentrated in the areas where such unemployment is likely to be endemic in the coming years. The financial implications of such an added focus are presented in Table 4.20.

4.40 Characteristics of the unemployed persons help in determining the nature of employment opportunities that need to be created to utilise the labour force that is seeking work. In regard to educational characteristics of the unemployed persons there has been a substantial change since the years of early eighties . Both the enumeration approach of the Census in identifying the unemployed persons, and the sampling approach of the National Sample Surveys on Employment and Unemployment reveal a substantial increase of literates among the unemployed persons (Table 4.21).

4.41 Among the unemployed persons 30 per cent were illiterate according to 1981 Census, but their proportion came down to 20 per cent in 1991 Census. Though there are substantial variations across States, if the States of Bihar, Madhya Pradesh, Punjab and Uttar Pradesh are excluded then more than 75 per cent of those unemployed in 1991 were literate. (Table 4.22)

4.42 National Sample Surveys show that, over the period 1983 to 1993-94, the proportion of those educated to a level of secondary school or higher among the unemployed persons increased from 47 per cent to 64 per cent. While a high proportion of the literates among the unemployed shows an unutilisation of scarce resources put in for educating the people, it also indicates a mismatch between the kind of job opportunities that are needed and those that are available in the job market. Clearly, the increase of literates among the unemployed and further among the literate unemployed, of those with higher level of educational attainment points to the need for skilled jobs rather than the simple low productive manual labour that an illiterate has to resort to for a living. In contrast the unemployed with education at secondary or higher level have a potential for higher output and hence income, if work opportunities are available. In the States of Bihar, Gujarat, Punjab, Rajasthan and Uttar Pradesh the proportion of illiterates, or those with education only upto the primary level is 40 to 60 per cent compared to the all India average of 31 per cent (Table 4.22). With the regular wage employment shrinking, the educated unemployed have to find job opportunities as self-employed and such opportunities are mostly in the informal sector or outside the organised sector. This points to the need for pursuing strategies that help the informal sector to expand, particularly, in the high income growth locations, where the income levels in the unorganised sector can be expected to be fairly reasonable, and where bulk of the first generation migrants look for and find work. If the rising proportion of the literates among the unemployed is not checked by an appropriate strategy of development, then it may even result in a reduction in the demand for education. Such a development will lead to a possible increase in the illiterates or low educated persons in the labour force, and in turn a return to a higher proportion of labour force that is suitable only for unskilled and low productivity jobs. It is in this context that the strategies for sharper increase in the economic growth of low income - high illiteracy States assume a crucial importance.

4.43 The existing measures of employment, as per the data on employment available from the NSSO, do not directly convey the quality of employment in terms of the living standards of the workers. However, the data on changes in poverty, when read with that on unemployment and level of worker productivity in agriculture, shows some causal linkages between poverty reduction, on one hand, and employment intensity of growth and productivity of workers in agriculture, on the other. The following analysis suggests that any strategy for improving the quality of employment on a sustained basis will therefore have to have effective measures for raising agricultural productivity without compromising on the employment intensity of agriculture as an integral element, at least until such time as the rate of absorption of the labour force by the non-agricultural sectors is high enough to provide sufficient employment opportunities. Special employment programmes in themselves can only be a palliative or a short-run response to an immediate crisis of employment and poverty, but a lasting solution to the problem of poverty rests in raising the per worker productivity in agriculture.

4.44 Employment increased at close to 2 per cent per annum during the decade 1983 to 1993-94. In this period, incidence of poverty, expressed at proportion of poor in population, reduced by 8.51 percentage point. The absolute number of poor during the same period declined by 0.78 per cent. The relative position of changes in employment and poverty varies sharply across States (Table 4.23). States of West Bengal, Bihar, Karnataka, Kerala, Andhra Pradesh, Assam, Orissa, Rajasthan and Gujarat had an employment generating growth during 1983-94. Of these, the States of West Bengal, Kerala, Andhra Pradesh, Orissa and Gujarat were able to reduce the number of poor in this period, and Karnataka and Rajasthan were able to reduce the incidence of poverty. Most of these states which have achieved reduction in poverty in one sense or the other have also had a high level of productivity of male agricultural workers. On the other hand, States which exhibited a weak response of employment to growth could still reduce the incidence of poverty if they had high levels of agricultural worker productivity. Punjab and Tamil Nadu are cases in point. Though employment generating growth, and level of productivity of agricultural workers, are able to account for a small variation in the change in number of poor across States, the two definitely contribute to a decrease in the number of poor.

4.45 During the Ninth Plan period, the average productivity per worker in agriculture is targeted to increase by about 11.2 per cent over the five year period. Such a magnitude of increase in productivity was attained in over 12 years during the past two decades. If the fruits of this growth are shared between land and capital, on one hand, and labour, on the other, in roughly the same proportions as in the past, it is likely that the incidence of rural poverty will decrease by a significantly larger magnitude during the Ninth Plan period than it had during the period 1983-84 to 1993-94. In other words, a reduction in the rural poverty rate of at least 7.15 percentage points is not at all unlikely between the base and the terminal years of the Ninth Plan with the given magnitudes of agricultural growth and the rate of labour absorption in agriculture. The magnitude could potentially be even larger in view of the significantly lower growth rate of population and can be further accelerated if the distribution of the additional value-added in agriculture is effectively altered in favour of labour through a meaningful and well-structured EAS programme.

4.46 The experience of 1983-94 on changes in employment and poverty, reinforces the perception that a strategy for reduction in poverty in low income States based on employment generation, has to be accompanied by measures which contribute to sharp improvement in productivity of agricultural workers in these States. If the acceleration in growth of output from around 3 per cent per annum realised so far to 4 per cent per annum targeted in the Plan has to show its effect on the lot of majority of workers in poor States, then the regional contribution to such acceleration in growth of agricultural output has to be realised by a distribution of agricultural output across States, which is quite different from what exists at present, and shifted in favour of States where bulk of agricultural work force is located. (Table 4.19). Step up in Agriculture growth following the existing regional distribution of output may be quite feasible but will require large-scale migration of workers from low agriculture productivity States. Alternatively, the targeted acceleration in agricultural growth may take place without a tangible impact on the incidence of poverty. Therefore, the regional distribution of agricultural growth is a crucial element in the efforts to reduce poverty significantly in the country during the Ninth Plan and the prospective period.

4.47 Sectoral programmes discussed in the respective Chapters have a direct bearing on employment. Some of the Sectors have more direct employment generating potential and require special policies from the employment angle in the Ninth Plan

4.48 Agriculture has been playing crucial role in past years in economic development of the country and will continue to do so in near future too primarily because of its predominant share in total employment. It contributes 29.4% of GDP and employs 64% of the workforce. However, agriculture cannot be expected to employ a large number of workforce indefinitely and also hold its share in overall GDP. It is common knowledge that beyond a certain level of development employment content of crop-output growth tends to decline as is observed in the low and declining employment elasticities in some of the agriculturally better developed States. It is, however, seen that development of agriculture in a large number of States in India is still at a stage where output growth leads to a substantial increase in employment. In large parts of the country, agricultural growth would continue to significantly contribute to employment growth. It is necessary to increase public investment in agriculture especially for strengthening irrigation and other rural infrastructure in backward areas so that sustained agricultural growth and , therefore, acceleration of employment growth is facilitated. The rural employment programmes need to be more firmly oriented towards rural infrastructure development programme. Such efforts designed especially to reducing dependence of agriculture on rainfall alongwith development and utilisation of dry-land technologies would also ensure a reasonable growth of agriculture.

4.49 Horticulture is an employment intensive sector. Given the emphasis on these products in the Ninth Plan, the cold storage capacity needs to be significantly increased. Infact, substantial agricultural growth would require a massive expansion and upgradation of agricultural marketing infrastructure.

4.50 The plantation sector provides direct and indirect employment for about 42 million people, besides generating downstream economic activities. The main emphasis will be on increasing productivity, accelerating replanting activities, rapid expansion in non-traditional areas, improvement in packaging and quality assurance.

4.51 Animal Husbandary and Dairying will receive greater attention for development during the Ninth Plan as this sector plays an important role in generating employment opportunities and supplementing incomes of small marginal farmers and landless labourers, especially in the rainfed and drought-prone areas. For animal husbandary and dairying, the focus would be on disease control, improvement in genetic resources, extension services and strengthening of marketing and credit infrastructure. Adequate availability of quality fodder and feed will be crucial.

4.52 For fishery, the focus should be on integrated development of marine and land fishery, conservation and upgradation of aquatic resources and adequate availability of quality seeds and feed.

4.53 Agricultural exports will receive special attention as this area offers greater potential for increasing farm incomes, tackling unemployment and earning foreign exchanges. As the achievement of 3.9 per cent rate of growth would involve a large jump in agricultural exports, the marketing infrastructure for exports, particularly the cold storage chain, the railways , port and communication facilities, facilities for packaging, grading and certification of agricultural commodities and development of future markets would require special attention. During the perspective period, India is expected to emerge as a net exporter of agricultural products. Thus, creation of specialised infrastructure would require focussed attention

4.54 Agriculture and other land- based activities, in the long run, even with a high and diversified rate of growth will not be able to ensure employment to all the rural workers adequate levels of incomes. Technological advancement and institutional changes in agriculture sector will lead to further shrinking of employment potential in the growth and also conversion of a substantial number of those underemployed in agriculture into openly unemployed seeking work elsewhere. Given the fact that some of them will be able to get employment in urban areas; still it is necessary that the rural economy gets diversified into non-farm activities to provide productive employment to the growing rural labour force. This will also help in arresting migration from rural areas to urban areas. Rural non-farm sector which has accounted for a steadily rising share of the rural workforce (from about 15 per cent in 1978 to 22 per cent in 1987-88 and 23 per cent in 1993-94) has registered a rate of employment growth of around 5 per cent between 1987-88 and 1993-94. There is certainly a discernible shift in the growth structure of productive employment opportunity in the non-farm sector in the rural areas. This phenomenon cannot be treated as over-crowding in agriculture. Practically all non-farm activities have shown a steady increase in employment. Manufacturing and services respectively accounted for 31 and 27 per cent of rural non-agricultural employment; trade accounted for 20 per cent and construction 12 per cent in 1993-94. Manufacturing has shown about 1 per cent growth in employment during 1988-94. But Services, Transport and trades have shown an annual growth in employment of about 4, 3 and 3 per cent per annum respectively during this period. Such diversification and expansion of the rural economy particularly non-farm sector is possible through promotional policies and effort particularly in respect of infrastructure, improved access to credit, technological upgradation and training in entrepreneurial development and marketing support.

4.55 With suitable promotional policies, including those relating to location and infrastructural development in rural towns, considerable expansion of activities with a high employment potential for rural workers is feasible. Such policies should include measures for orientation of credit and lending practices of banks to suit small business and manufacturing enterprises, strengthening of producers cooperatives and assistance in marketing and technology.

4.56 Consumer goods industries account for two-thirds of manufacturing employment and a little over a one-third of GDP from Manufacturing. It includes a major part of the Small Scale sector. A large domestic demand for a variety of consumer products offer tremendous scope for expansion of output and employment in this sector.

4.57 The number of Industrial Entrepreneurs Memoranda(IEM) and Letters of Intent (LOI) filed from 1991 to December, 1996, totalled 31,157 with overall investment intention of Rs.6,34,760 crore and estimated employment of 5.7 million. There has been substantial growth in the assistance disbursed by the all-India financial institutions during this period. Foreign firms and Multi - National Corporations (MNCs) were showing keen interest in investing in India . The total number of foreign collaborations during 1991-1996 amounted to 10,041 of which 5,434 proposals involved foreign direct investment (FDI) amounting to Rs.78,030 crore.

4.58 The textile industry is one of the largest and the most important sectors in the economy in terms of output, employment generation and foreign exchange earnings. It is presently contributing 20 per cent to the national industrial production and 33 per cent to the total national export earnings. It has also made a significant contribution to employment generation by providing over 20 million jobs. The modernization of textile sector would be a major thrust area in the Ninth Plan. For this purpose, it is proposed to create a Textile Modernisation Fund.

4.59 The VSI sector has a considerable potential for generating employment. The village and small industries (VSI) sector has been growing at the rate of about two to three percentage points higher than the large and medium industries sector. Today , it contributes more than 40 per cent of value-added in the manufacturing sector and 80 per cent of total employment in the industries sector. Its contribution to exports is significant and accounts for more than 40 per cent( both direct and indirect). During the Ninth Plan because of immense potential of creating new jobs at low cost the VSI sector has been accorded high priority by providing incentive and support to facilitate their growth and employment. The Khadi and Village Industries (KVI) sector is not only providing employment to people in rural and semi-urban areas at low investment per job, but also utilise local skill and resources and provides part-time as well as fulltime work to rural artisans, women and minorities. The spread of village industries would also ensure increase in income levels and quality of life of rural workers, artisans and craftsmen. Therefore, the thrust area will be promotion of village industries under KVIC during the Ninth Plan.

4.60 The Handloom sector provided employment to 124 lakh persons during 1996-97 which is next to agriculture in terms of employment intensity despite facing problems like obsolete technology and traditional production techniques, high price of inputs, inadequate market intelligence etc. Through appropriate policy measures by the end of the Ninth Plan, the employment in handlooms is expected to reach about 173 lakh persons.

4.61 In the case of sericulture which is an important labour intensive and agro-based cottage industry providing employment to about 62 lakh persons has a large rural employment generation potential, in addition to enhancing credit availability on easy terms, special attention will be paid to improvement of quality of raw silk by introducing better silkworm breeding practices.

4.62 Today the Food Processing Industry contributes about 18% of the total output of the industrial sector (GDP) and provides employment to about 1.5 million persons. However, about 70% of the units in this sector are in the informal sector, in a primitive state of technology. This sector has enormous scope for growth. The country being the largest grower of fruits and second largest producer of vegetables, having a large livestock population and a long coastline for exploiting fisheries resources, the food processing industry promises to be an area where the potential for development is enormous.

4.63 Among the major sectors of economic activity, construction recorded the highest growth in employment of over 13.36 per cent per annum during the period 1983 to 1987-88. However, it has declined sharply between 1987-88 to 1993-94. The growth rate of employment in construction in last 10 years ( i.e.1983 to 1993-94) has been 5.33 per cent per annum. Housing, rural roads, school , Health sector buildings are all part of Construction Sector. With liberalisation of infrastructure building, it was expected that larger private investment would be forthcoming in construction sector. However, the climate for private and household investment does not still seem favourable. The employment effect of construction growth is very high not only because of its high employment elasticity, but also because of the high employment multiplier effect it has among the major sectors of the economy.

4.64 Trade, Transport and Services sector have done relatively better during the last ten years. Growth rates of employment in trade has been 3.55% per annum during 1987-88 to 1993-94 as against 3.64% per annum during 1983 to 1987-88. Similarly, in Transport sector, employment growth between 1983 to 1993-94 have been about 3.59% per annum. The most remarkable growth has been experienced by Services sector where the growth rate of employment has been 5.39% per annum during 1987 -88 to 1993-94 compared to 1.84% per annum between 1983 to 1987-88. In view of the above, it is expected that the services sector has got substantial potential of employment growth in the coming years.

4.65 A part of the unemployment problem emanates from the mismatch between the skill requirements of employment opportunities and the skill base of the unemployed. The mismatch is likely to become more acute in the process of rapid structural changes in the economy. It is, therefore, necessary to orient the educational and training system towards improving its capability to supply the requisite skills in the medium and long terms, so as to enable it to quickly respond to labour market changes in the short run. Besides, the system should also be in a position to impart suitable training to the large mass of workers engaged as self-employed and wage earners in the unorganised sector for upgradation of their skills , as an effective means for raising their productivity and income levels.

4.66 The existing training institutions like the Industrial Training Institutes (ITI s) have, no doubt , been meeting a significant part of the requirements of the skilled manpower of the organised industry. It , however, seems necessary that the processes of restructuring and reorientation of their courses are made more expeditious with a view to quickly responding to the labour market. A greater involvement of industry in planning and running the training system would also be necessary for this purpose. For skill upgradation of the workers in the unorganised sector, flexibility in the duration , timing and location of training courses would need to be introduced . To the extent a sizeable proportion of employment would have to be self-employment in tiny and small units in various sectors, the training system should also gear up not only for providing ` hard ` skills suitable trades, but also the ` soft ` skills of entrepreneurship , management and marketing , as part of training courses.

4.67 It is widely recognised that the rapid expansion of education, particularly of higher education , has also contributed to the mismatch in the labour market. While shortages of middle level technical and supervisory skills are often experienced , graduates and post-graduates in arts, commerce and science constitute a large proportion of the educated unemployed. High private rates of returns on higher education, to a large extent resulting from low private cost, is an important reason for the rush for higher education despite high incidence of educated unemployment. At the same time, efforts to divert the school leavers to vocational stream have so far been too little in relation to the size of the problem. While these efforts need to be strengthened, appropriate mechanisms also need to be evolved in the training and employment system to ensure that those graduating out of the vocational and middle level technical training courses, have the route to higher ladders open to them, through upgradation of their qualifications and skills by undergoing training in higher level courses during their employment career.