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Dr C. Rangarajan

Our Bureau

New Delhi, Oct. 6 If the economy continues to grow at nine per cent plus, there will no unemployment in the country by 2008 “even under very conservative assumptions”, according to Dr C. Rangarajan, Chairman of the Prime Minister’s Economic Advisory Council.

As per the results of the National Sample Survey Organisation’s (NSSO) latest quinquennial survey (61st round), the country’s total labour force amounted to 469.06 million in 2004-05, of which the workforce (the labour force that is employed) stood at 457.82 million. The balance 11.24 million was the unemployed — people seeking or available for work.

In an article “Revisiting Employment and Growth” written for the September issue of ICRA Bulletin, Dr Rangarajan has noted that the period since 1999-2000 has seen a reversal of the declining trend in employment growth characterising the initial years of the post-reform era.

Between 1999-2000 and 2004-05, employment grew by 2.89 per cent on a compounded annualised basis, as against a mere 0.98 per cent over the earlier period from 1993-94 to 1999-2000. But on the other hand, the labour force registered an unprecedented annual growth of 2.93 per cent, which was almost twice the population growth rate.

This kind of growth in the numbers seeking employment — mainly due to increase in female participation in the labour force — could have had “serious implications for the unemployment scenario”, Dr Rangarajan has pointed out. But the high GDP growth rates in the recent period have helped accommodate them into the workforce and as a result, the unemployed population went up only marginally from 9.05 million to 11.24 million between 1999-2000 and 2004-05.

Dr Rangarajan has projected a scenario where the economy would continue to grow at 9.13 per cent (quick estimates for 2005-06), with elasticity of employment at 0.29 (the average over a longer period from 1993-94 to 2004-05) and the growth in labour force at 1.89 per cent (the average for 1993-94 to 2004-05).

In this scenario, the total workforce in 2008 would touch 501.16 million, which will exceed the labour force of 496.16 million. In other words, no unemployment at all!

According to Dr Rangarajan, these projections are conservative because the assumed employment elasticity of 0.29 is lower than 0.48 actually recorded during 1999-2000 and 2004-05.

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Unemployment may be rooted out by 2008: Rangarajan

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