On unemployment in Indian States

On unemployment in Indian States


A recent report by the International Labour Organization (ILO) and the Institute for Human Development (IHD) has shed light on a concerning trend: two out of every three unemployed individuals in India are young graduates.

  • This revelation underscores the urgent need for policy intervention to address the issue of unemployment, especially among the youth.

GS-03 (Economy)

Dimensions of the Article:

  • Significance of the Issue
  • Implications
  • Determinants of Unemployment
  • Education and Employment
  • Suggested Measures

Significance of the Issue:

  • Unemployment poses a significant challenge to India’s economic and social fabric, particularly when it disproportionately affects young graduates.
  • With limited job opportunities and a growing pool of educated youth entering the workforce, addressing unemployment becomes imperative for ensuring inclusive growth and social stability.
  • Moreover, the prevalence of unemployment among graduates not only reflects individual hardships but also hampers the nation’s potential for innovation and economic progress.


  • The analysis of unemployment rates across different states in India reveals several noteworthy patterns and implications.
  • States like Goa, Kerala, Haryana, and Punjab, despite their relatively higher economic status, exhibit alarmingly high unemployment rates, indicating underlying structural challenges.
  • Conversely, states with lower per capita incomes, such as Uttar Pradesh and Madhya Pradesh, paradoxically report lower unemployment rates, raising questions about the complex interplay between economic development and job creation.

Determinants of Unemployment:

  • The relationship between unemployment rates and the prevalence of self-employment offers valuable insights into the dynamics of job availability.
  • States with a higher proportion of self-employment tend to have lower unemployment rates, suggesting the importance of informal sectors in absorbing job seekers.
  • However, the causal relationship between self-employment and unemployment remains ambiguous, warranting further investigation into underlying factors driving these trends.
  • Moreover, the urbanization of states appears to have a significant impact on unemployment rates, with highly urbanized states like Goa and Kerala experiencing higher unemployment due to limited informal job opportunities.
  • This contrasts with states like Uttar Pradesh and Madhya Pradesh, where a larger share of the labor force engaged in rural agriculture serves as a buffer against unemployment.

Education and Employment:

  • The link between education and unemployment is another crucial aspect highlighted in the analysis. States with higher levels of educational attainment, such as Kerala, often grapple with higher unemployment rates among graduates.
  • This suggests that simply increasing educational qualifications may not necessarily translate into improved job prospects, underscoring the need for alignment between educational outcomes and market demand.
  • Furthermore, the aspirations of graduates for high-wage jobs in the formal sector contribute to the mismatch between skills and employment opportunities. This mismatch, compounded by inadequate skill development infrastructure and evolving job market dynamics, exacerbates the unemployment crisis among educated youth.

Suggested Measures:

  • Skill Development and Education Reform: Investments in skill development programs and educational reforms aimed at enhancing employability are essential to bridge the gap between education and employment. Aligning curriculum with industry requirements, promoting vocational training, and fostering entrepreneurship can empower graduates with the requisite skills for diverse job opportunities.
  • Promoting Informal Sector Growth: Recognizing the pivotal role of the informal sector in absorbing job seekers, policies should prioritize measures to promote informal sector growth and entrepreneurship. Facilitating access to credit, providing technical assistance, and fostering innovation in informal enterprises can create avenues for sustainable employment generation.
  • Regional Employment Strategies: Tailored regional employment strategies that account for the unique socio-economic context of each state are crucial for addressing localized unemployment challenges. Targeted interventions to promote rural livelihoods, enhance urban infrastructure, and attract investment in key sectors can unlock employment potential and spur inclusive growth.
  • Policy Coherence and Implementation: Effective coordination among government agencies, stakeholders, and policymakers is essential for coherent policy formulation and implementation. Streamlining regulatory frameworks, eliminating bureaucratic hurdles, and fostering a conducive business environment can create an enabling ecosystem for job creation and economic development.