Educated Unemployment in the Indian Context

This article discusses the problem of educated unemployment in India. The recent release of NSSO data regarding unemployment is a major focus. Causes of educated unemployment as well as government schemes to resolve this issue are also discussed.

Educated unemployment is generally understood to be a situation where a person with the necessary educational qualifications who are willing to work at the prevailing wages is not able to find work. In recent times this problem has come to assume a frightening level. A variety of factors including a large population and the defects in the educational system as well as the inability to provide a diversified and vibrant economy can be considered to be the prime reasons for the problem of educated unemployment.

NSSO and the Periodic Labour Force Survey

The unofficial figures of the NSSO's Periodic Labour Force Survey (PLSS) pertaining to the year 2017-18 have recently been released. And from what we see in the data, the situation of unemployment seems to be going from bad to worse. According to the data, open unemployment was 6.1% in 2017-18. This is the highest in four decades. The numbers are worse for educated persons. Just for an instance, among educated rural females, the level of unemployment was 17.3%. Critics have pointed out that the demonetization exercise carried out in the previous year may have been the reason for these numbers. The NITI Aayog, however, has claimed that the numbers are only from a draft report and not the final one. Moreover, the method to measure unemployment has changed in the current PLFS. Whatever that might be, it is undoubtedly true that something needs to be done to check the current employment scenario especially in the field of educated unemployment.

Education and the Economy

In recent times there has been a rapid increase in the number of educated youth. The tertiary education enrollment ratio (18-23 years) has risen from 11% in 2006 to 26% in 2016. The gross secondary enrollment ratio (secondary education comprises of 9th and 10th standard) for the 15-16 year age group has risen from 58% in 2010 to 90% in 2016. In comparison to this rise in the number of educated youth, the jobs in secondary and tertiary sectors have not risen at a commensurate rate. The secondary and tertiary sectors are important in this regard, as educated individuals usually look for non-farm employment. The Index of Industrial Production (IIP) was only 125.3 in 2017-18 (base year: 2011-12) which means that the manufacturing sector has shown a slowdown. This was reflected in the loss of 10.6 million manufacturing jobs between 2011-12 and 2015-16. Unless adequate steps are initiated to combat this slowdown, the employment scenario will remain grim.


The Rajasthan and Madhya Pradesh state governments have recently launched schemes to provide monthly financial assistance to unemployed youth. However such schemes may not be of much benefit in the longer run. A somewhat better concept was the launch of micro-entrepreneurship schemes and schemes for skill development. These are discussed below.

MUDRA Scheme

The MUDRA scheme was launched in April 2015. It seeks to provide loans up to Rs. 10 lakh to non-corporate, non-farm small and micro entrepreneurs. By encouraging entrepreneurship, the scheme hopes to tackle the issue of unemployment. However, the average loan discharged was only Rs. 45,034 which is not enough to start an employment generating enterprise. Also, only 1.3% of loans are over Rs. 5 lakh which can be called enough to start an enterprise that would also generate employment. The remedy to this lies in increasing penetration of this scheme.

Pradhan Mantri Kaushal Vikas Yojana (PMKVY)

The PMKVY was launched in July 2015 to further the objective of skill development and thus reduce educated unemployment. The government allocated Rs. 1500 crores to train 2.4 million people. However, as the programme generally focussed only on short-term courses and since actual industry demands were often overlooked therefore the programme performed poorly in generating employment. The placement rate in 2015 under this scheme was merely 18%.

To combat the growing menace of educated unemployment the government should encourage investment in infrastructure so that the tertiary and secondary sectors receive a boost. Also, the existing problems in the education system need to be sorted out so that educated individuals are also employable individuals. It is hoped that the necessary steps will be taken in this regard.

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