Globalisation, Economic Growth, and Employment in India
Summary
Students and researchers in Indian economics, labour economics, development studies, and gender studies, as well as policy planners, will find this book helpful.
Excerpt
Table Of Contents
- Cover Page
- Title Page
- Copyright Page
- Contents
- List of Figures
- List of Tables
- Acknowledgements
- Chapter 1 Introduction
- 1.1 Background to the Study
- 1.2 Data Sources and Methodology
- Chapter 2 Economic Growth and Interstate Disparity in India
- 2.1 Introduction
- 2.2 Growth of Net State Domestic Product (NSDP)
- 2.3 Growth of Per Capita Net State Domestic Product
- 2.4 Growth Scenarios Across Various Production Sectors
- 2.5 Interstate Disparity
- 2.6 Summary of Findings
- Chapter 3 Labour Force Participation Patterns in India
- 3.1 Introduction
- 3.2 Trends of Labour Force Participation in India
- 3.2.1 The Size of the Labour Force
- 3.2.2 Share of Rural Areas in the Total Labour Force
- 3.2.3 Share of Females in the Total Labour Force
- 3.2.4 Labour Force Participation Rates
- 3.3 Labour Force Participation Across Age Groups in India
- 3.4 Labour Force Participation Across Education Levels in India
- 3.5 Labour Force Participation Among Social Groups in India
- 3.6 Labour Force Participation Among Religious Groups in India
- 3.7 Growth of the Labour Force in India
- 3.7.1 All-India Scenario
- 3.7.2 Labour Force Growth Rates by Age Groups
- 3.7.3 Labour Force Growth Rates by Educational Groups
- 3.7.4 Labour Force Growth Rates Among Social Groups
- 3.7.5 Labour Force Growth Rates Among Religious Groups
- 3.8 Composition of Persons Outside the Labour Force in India
- 3.9 Labour Force Participation in Major States
- 3.9.1 Labour Force Participation Rates by State
- 3.9.2 Ranking of States by Labour Force Participation Rates
- 3.9.3 The Growth of the Labour Force in the States
- 3.9.3.1 Pre-Globalisation Period (1983 to 1994)
- 3.9.3.2 Post-Globalisation Period (1994 to 2018)
- 3.10 Determinants of Labour Force Participation: Findings from Logit Regression
- 3.10.1 Logit Regression Results
- 3.11 Summary of Findings
- Chapter 4 India’s Evolving Employment Landscape: The Quantitative Dimensions
- 4.1 Introduction
- 4.2 Trends in Workforce Participation in India
- 4.2.1 Size of Workforce
- 4.2.2 Share of Females in Total Workforce
- 4.2.3 Workforce Participation Rates
- 4.3 Workforce Participation by Age Groups in India
- 4.3.1 Shares of Total Workforce (Employed) and Total Population by Age Groups
- 4.4 Workforce Participation by Educational Groups in India
- 4.4.1 Shares of Total Workforce (Employed) and Total Population by Educational Groups
- 4.5 Workforce Participation Among Social Groups in India
- 4.5.1 Shares of Total Workforce (Employed) and Total Population by Social Groups
- 4.6 Workforce Participation Among Religious Groups in India
- 4.6.1 Shares of Total Workforce (Employed) and Total Population by Religious Groups
- 4.7 Growth of the Employment (Workforce) in India
- 4.7.1 Growth of Employment Across India
- 4.7.2 Growth of Employment in India by Age Groups
- 4.7.3 Growth of Employment in India by Educational Groups
- 4.7.4 Growth of Employment in India by Social Groups
- 4.7.5 Growth of Employment in India by Religious Groups
- 4.8 Evolving Employment Scenarios in Major States
- 4.8.1 Workforce Participation Rates Across the States
- 4.8.2 Overall Performance of States Regarding Workforce Participation Rates
- 4.8.3 Growth of the Workforce in the States
- 4.8.3.1 Period: 1983 to 1994 (Pre-Globalisation)
- 4.8.3.2 Period: 1994 to 2000
- 4.8.3.3 Period: 2000 to 2012
- 4.8.3.4 Period: 2012 to 2018
- 4.8.3.5 Period: 1994 to 2018 (Entire Post-Globalisation)
- 4.8.4 Comparison of Employment Growth Rates During Pre- and Post-Globalisation Periods
- 4.9 Determinants of Employment Status in India
- 4.9.1 Logit Regression Results
- 4.10 Summary of Findings
- Chapter 5 India’s Evolving Employment Landscape: The Qualitative Dimensions
- 5.1 Introduction
- 5.2 Distribution of Workers by Employment Modes in India
- 5.2.1 Average Annual Changes in Worker Numbers by Employment Mode
- 5.2.2 Growth Rates of Workers by Employment Modes
- 5.3 Modes of Employment by Social and Religious Groups
- 5.3.1 Modes of Employment Among Social Groups
- 5.3.2 Modes of Employment Among Religious Groups
- 5.4 Employment Modes for Workers in Major States
- 5.4.1 Percentage Distribution of Rural Workers in Self-Employment, Regular Employment, and Casual Labour Across States
- 5.4.2 Percentage Distribution of Urban Workers by Self-Employment, Regular Employment, and Casual Labour Across States
- 5.4.3 Percentage Distribution of All (Rural Plus Urban) Workers Across Self-Employment, Regular Employment, and Casual Labour in States
- 5.5 Growth Rates of Workers by Employment Modes in Major States
- 5.6 Incidence of Poverty Across Various Employment Modes
- 5.7 Factors Influencing Workers’ Choices of Employment Mode
- 5.7.1 Factors Influencing Employment Mode Selection in Rural Areas
- 5.7.2 Factors Influencing Employment Mode Selection in Urban Areas
- 5.7.3 Factors Influencing Employment Mode Selection in Combined (Rural Plus Urban) Areas
- 5.8 Summary of Findings
- Chapter 6 Employment Diversification in India
- 6.1 Introduction
- 6.2 Pattern of Employment Diversification in India
- 6.2.1 Distribution of Workers by Sector at the Two-Digit Level of Industrial Classification
- 6.2.2 Sectoral Distribution of Workers by Social Groups
- 6.2.3 Sectoral Distribution of Workers by Religious Groups
- 6.3 Growth of Workers Across Various Sectors in India
- 6.3.1 Shares in Total Workers and Growth Rates of Workers Across Different Sub-Sectors (Two-Digit Level)
- 6.3.2 Shares of Various Sectors in Incremental Workers
- 6.4 Pattern of Employment Diversification in Major States
- 6.4.1 Employment Diversification (Combined Rural and Urban Areas)
- 6.4.2 Rural Employment Diversification
- 6.4.3 Growth Rates of Farm and Non-Farm Workers (Combined Rural and Urban Areas)
- 6.4.3.1 Growth of Farm Workers
- 6.4.3.2 Growth of Non-Farm Workers
- 6.4.4 Growth of Farm and Non-Farm Workers in Rural Areas Alone
- 6.4.4.1 Overall Performance of the States Regarding Growth in Farm and Non-Farm Employment in Rural Areas
- 6.5 Relationship Between Income and Employment Growth in India
- 6.5.1 Employment Elasticities Across the States
- 6.6 Choice of Sector of Employment by the Workers in India
- 6.7 Summary of Findings
- Chapter 7 Shifts in India’s Employment Landscape (2018–2024)
- 7.1 Introduction
- 7.2 Changes in Quantity Aspects of Employment
- 7.2.1 Labour Force Participation Rates by Gender and Region in India
- 7.2.2 Labour Force Participation Rates by Age, Education, Social, and Religious Groups
- 7.2.3 Workforce Force Participation Rates by Gender and Region in India
- 7.2.4 Workforce Participation Rates by Age, Education, Social, and Religious Groups
- 7.2.5 Absolute Numbers and Growth Rates of the Labour Force and Workforce in India
- 7.2.6 Activity Profile of Out-of-Labour Force Individuals
- 7.2.7 Labour Force Participation Rates in Major States
- 7.2.8 Workforce Participation Rates in Major States
- 7.2.9 Growth Rates of Labour Force in Major States
- 7.2.10 Growth Rates of Workforce in Major States
- 7.2.11 Factors Influencing Labour Force Participation
- 7.3 Changes in Quality Aspects of Employment
- 7.3.1 Modes of Employment by Gender and Region in India
- 7.3.2 Growth Rates of Workers Under Different Modes of Employment
- 7.3.3 Modes of Employment in Major States
- 7.3.4 Sectoral Composition of Workers in India by Gender and Region
- 7.3.5 Growth Rates of Workers in Different Sectors in India
- 7.3.6 Employment Diversification in Major States
- 7.3.7 Incidence of Working Poor in India
- 7.3.8 Elasticities of Employment in Different Sectors
- 7.4 Employment Performance by the States
- 7.5 Summary of Findings
- Chapter 8 Conclusions and Policy Implications
- 8.1 Economic Growth and Interstate Disparity
- 8.2 Trends and Patterns of Labour Force Participation, 1983–2018
- 8.3 Quantitative Aspects of Employment Changes, 1983–2018
- 8.4 Qualitative Aspects of Employment Changes, 1983–2018
- 8.5 Trends and Patterns of Employment Diversification, 1983–2018
- 8.6 Change and Continuity in Employment Landscape, 2018–2024
- 8.7 Employment Performance Overview by State
- 8.8 Policy Implications
- Bibliography
- Index
Acknowledgements
This book draws on my research into employment in India over the past deccade and a half. I must begin by expressing my gratitude to my mentor, the late Professor G. K. Chadha, former Vice Chancellor of Jawaharlal Nehru University and former President of the South Asian University, New Delhi. He first introduced me to issues of growth and employment in India in the 1980s when I was his research student. Although my initial research under his guidance focused on agrarian issues, he fostered in me a deep interest in crucial aspects of the Indian economy, such as employment and unemployment, which I ultimately came to regard as one of my favourite research areas.
Over the years, I have gained valuable insights into employment issues in India through my participation in various conferences organised by the Indian Society of Labour Economics. I sincerely thank Dr Alakh N. Sharma, Director of the Institute for Human Development in New Delhi, for inviting me to these events. The works of many senior researchers on growth and employment have shaped my thinking and guided my research. Notably, I must acknowledge distinguished economists such as the late Dr Ajit K. Ghose, the late Dr T. S. Papola, Dr C. Rangarajan, Dr Rizwanul Islam, Dr Santosh Mehrotra, Dr Praveen Jha, Dr K. P. Kannan, and Dr Amit Basole.
Much of this work was carried out while I was at the University of Calcutta, the Central University of South Bihar, and the Patliputra School of Economics. All my colleagues there supported me in many different ways, which helped me to complete this rather challenging task.
I received assistance from many of my students with data processing tasks at different times. I would like to specifically thank Ankita De Sarkar, Jiten Giri, and Suraya Roy for their assistance. However, the most valuable support came from two of my research students, Dr Atreyee Pal and Dr Sk. Abdul Rashid, xxivwho not only motivated me to complete this work but also carefully read the manuscript, provided helpful comments and identified several errors in data presentation and interpretation. Without their support, this work would not have come to fruition; for this reason, I dedicate it to them.
Some parts of this work were prepared with the support of the Indian Council of Social Science Research, New Delhi, through a research project grant, for which I am grateful.
I appreciate the two anonymous referees for their helpful and constructive comments, which contributed to the improvement of the manuscript.
As always, my wife, Bidisha, and my daughter, Jayini, remain my main inspirations for undertaking serious academic research. I am deeply grateful to them.
I want to express my gratitude to Ms Indrani Dutta, Acquisitions Editor at Peter Lang International Academic Publishers, for her guidance and inspiration in preparing this manuscript. I also appreciate the assistance and support of their editorial and production teams.
Sankar Kumar Bhaumik
Chapter 1 Introduction
1.1 Background to the Study
The primary goal of any nation, particularly in the developing world, is to promote rapid economic growth and generate sufficient employment opportunities. These objectives become increasingly vital when the aim is to achieve inclusive growth, which emphasises creating employment opportunities alongside higher economic growth, as measured by national income growth. Nonetheless, it is crucial to recognise that higher economic growth and employment generation do not always co-occur, a phenomenon that has sparked substantial interest in the economic literature. In this context, Keynes (1936) and Kalecki (1944) noted that the relationship between income growth and employment growth is primarily determined by aggregate demand. According to them, increasing income stimulates aggregate demand in the domestic market, fostering employment and enhancing economic output. Their perspective highlights the government’s crucial role in stimulating aggregate demand through effective monetary and fiscal policies. Conversely, neoclassical economists argue that employment creation is more closely linked to the structural features of the labour market than to demand alone. Following this, new classical or supply-side economists argue that economic growth is best achieved by increasing the aggregate supply of goods and services. This is often achieved through policies such as tax cuts, deregulation, and free trade, which aim to stimulate production and investment, ultimately leading to increased employment. However, they acknowledge that short-term unemployment may occur when proper price signals are lacking, often due to insufficient information or excessive government intervention. In such cases, they remain optimistic that the economy’s self-correcting nature 2will eventually reduce long-term unemployment, provided there is a steady flow of information.1
During the 1960s, the relationship between income growth and employment was described by ‘Okun’s Law’, which indicated a negative correlation between the unemployment rate and GDP (income) growth, while accounting for population growth rates. Kaldor (1955) identified that the difference between output and productivity growth determines employment growth. Thus, while increased output growth typically boosts employment growth, the opposite can occur if productivity rises. Although Purfield (2006) supported Kaldor’s viewpoint, researchers such as Khan (2001, 2007) and Islam (2006, 2010), having examined various Asian countries, argue that employment growth is not necessarily inversely related to increases in labour productivity. They suggest that a high economic growth rate (output growth) can promote increased employment and labour productivity, particularly when it arises from expanding labour-intensive sectors.
An analysis of the Indian economy’s development since independence reveals that employment was initially regarded as a byproduct of economic growth during the country’s planning phase (Papola, 2008; Bhaumik, 2013). Consequently, development policies focused more on achieving higher GDP growth rates rather than on implementing distinct strategies for employment expansion.2 Furthermore, 3these strategies were primarily grounded in a state-led growth policy that, due to various intrinsic inefficiencies, ultimately led to a severe balance of payments crisis and macroeconomic instability in the 1980s. In response to these crises, India implemented economic reforms since July 1991, embracing ‘liberalisation and globalisation’,3 a strategy akin to the ‘Washington Consensus’ that strongly advocates for freer markets and a reduced role for the state. It is worth noting that the twin phenomena of liberalisation and globalisation are closely interlinked (Sikdar, 2006). Liberalisation led to a significant decrease or steady removal of the state’s involvement in economic activities, allowing market forces to operate independently and encouraging the private sector to thrive and prosper the economy. Liberalisation comprised two aspects: internal and external. Following internal liberalisation, India aimed to implement reforms granting private-sector producers greater decision-making freedom. External liberalisation involved the gradual easing of state regulation over foreign trade, investment, and capital movement 4in and out of the country (Ibid.). An alternative term for external liberalisation is globalisation, which seeks to achieve greater economic integration with the rest of the world in trade, assets, technology, knowledge, information, and ideas across national boundaries. It is worth noting, however, that India took a gradual approach to liberalisation and globalisation (Ahluwalia, 2002), thereby protecting its economy from global shocks such as the 2008 financial crisis.
Several past studies have investigated the impact of liberalisation and globalisation policies in India,4 especially in areas such as economic growth, regional or interstate disparities, employment, unemployment, and poverty. Focusing on the effect of globalisation on economic growth, Ahluwalia (2002) reported that India’s annual gross domestic product (GDP) growth rate increased from 3.2 % between 1971 and 1981 to 5.7 % from 1998 to 2003. Although this view has been disputed by Nagaraj (2000), subsequent scholars provided ample evidence that GDP growth accelerated during the period following liberalisation and globalisation (Shetty, 2003; Ahmed, 2007; Ahluwalia, 2002a, 2011; Bhandari & Kale, 2019; Panagaria et al., 2014).
While the era of globalisation saw the country’s GDP growth rate outpace that of the pre-globalisation period, scholars have expressed concerns about rising inequality among states in per capita net state domestic product (NSDP) growth. Given that states begin with different structural weaknesses and natural resource endowments and often implement varying policy regimes, it is only to be expected that they will exhibit differing growth performances. Whether this contributes to the widening inequality between them is a vital issue for investigation. To investigate this, scholars have examined the hypotheses of ‘beta-convergence’ and ‘sigma-convergence’ (Barro & Sala-i-Martin, 1995). Within this context, although some researchers have identified evidence of conditional convergence among Indian states in terms of per capita net state domestic product (PCNSDP) growth rates, the majority have backed the hypothesis of divergence (Dholakia, 1994; Cashin & Sahay, 1996; Bajpai & Sachs, 1996; Marjit & Mitra, 1996; Ahluwalia, 2000; Dasgupta et al., 2000; Aiyar, 2001; Nayyar, 2008; Chikte, 2011; Kumar & Subramanian, 2012; Sanga & Shaban, 2017; Ghosh & Kaustabh, 2025), suggesting an increase in inequality among the states in terms of PCNSDP growth.
There is now a broad consensus that, despite the Indian economy’s higher GDP growth rates since the reforms, employment growth has been inadequate, resulting in a period of jobless growth. Data from the quinquennial employment/unemployment surveys and the Periodic Labour Force Survey (PLFS) of 2017–18, 5conducted by the National Sample Survey Office (NSSO), indicate that India’s annual employment growth rate sharply declined after the adoption of economic reforms and globalisation policies. Moreover, there are variations in employment performance across states, arising from differences in NSDP growth, the pace of employment diversification, informal versus formal employment structures, urbanisation, and levels of infrastructural development. The sluggish growth of the manufacturing sector and excessive reliance on informal sector employment have posed challenges in generating stable and higher-quality employment (Sharma, 2024). It has also been observed that rural areas have consistently fallen behind urban areas in employment performance since liberalisation and globalisation, prompting some scholars to describe the situation as a ‘setback’ (Bhalla, 2007; Chadha, 2001, 2009; Himanshu, 2011).
Moreover, concerns regarding the nature and quality of employment in India persist during the era of globalisation, particularly in rural areas where many workers are self-employed or engage in casual work. According to the latest figures, approximately three-quarters of India’s workforce is self-employed, with a significant portion involved in subsistence and low-productivity work. As globalisation has advanced, many producers have gradually adopted strategies that favour informalisation and casual employment, aiming to reduce production costs and compete globally. The presence of casual or contract workers, who are not subject to restrictive labour laws, provides greater flexibility to the labour market (Rajeev, 2006). Consequently, the number of casual and contract labourers in India has increased, particularly since the early 1990s when the country began implementing economic reforms. There is also rising concern regarding the decline of formal jobs in the organised sector and the informalisation of formal employment (Ghose, 2016a, 2016b). According to current statistics, fewer than one in ten employed individuals in India are part of the formal sector (Sharma & Mehta, 2024). Even public sector enterprises have reduced their workforce to alleviate financial pressures resulting from macroeconomic stabilisation policies. This trend has led to a decline in ‘white-collar’ employment opportunities.
Another significant trend in India following globalisation is the increasing proportion of females in the labour force (Sharma, 2024; IHD-ILO, 2024). However, this growth has primarily taken place in informal and irregular sectors, raising concerns about the quality and stability of such employment (Ghose, 2004; Lingam, 2006). This development may be due to females often accepting lower wages than their male counterparts, enabling employers to cut costs. In addition to examining the gender aspect of employment, researchers have shown growing interest in the composition of the labour force across religious groups, social categories, and age brackets within the context of globalisation. The available 6data suggest that the employment rate (or worker-population ratio) is highest among Hindus, while Christians experience the highest unemployment rates, followed by Muslims. Similarly, while labour force participation rates are higher for lower-caste groups than for upper-caste groups, the quality of employment they undertake also raises concerns. There is also considerable concern about the low employment rate among young people in India.
While India has consistently maintained high GDP growth rates since adopting globalisation policies, it continues to face widespread unemployment and underemployment. In other words, the employment-generating capacity of higher economic growth during the globalisation era has diminished, as shown by researchers who calculated employment elasticity values. The income elasticity of employment was found to be considerably lower in the post-globalisation era compared to the pre-globalisation era. Therefore, although GDP growth increased, employment growth either declined or failed to keep pace (Bhalla & Hazell, 2003; Islam, 2004). Given these circumstances, it is vital to analyse the employment elasticity using the latest data to understand the employment-promoting effects of the country’s recent growth processes, including those at the state level. Such analysis is crucial for making better-informed policy decisions aimed at improving future employment outcomes nationwide.
Against this backdrop, this study aims to shed light on the growth processes in India’s economy during the era of globalisation, focusing on whether these growth trajectories can generate employment. By analysing growth trends and employment outcomes at both the national and state levels throughout the globalisation period, and comparing them with the pre-globalisation phase, the study seeks to explore the relationship between economic growth and employment and assess the potential for increased economic growth to create meaningful employment opportunities. What sets this work apart from previous studies is its analysis of growth and employment trends in India and its states over more than forty years, using the latest available data and providing a detailed breakdown by region (rural/urban), sectors, gender, age, education level, and social and religious demographics.
Specifically, this book aims to provide empirical answers to the following research questions, which are crucial for gaining a clear understanding of India’s economic and employment dynamics in the context of globalisation: How has the growth performance of the Indian economy during the globalisation period compared with that in the pre-globalisation period? Which sectors or sub-sectors have contributed to higher income growth during the era of globalisation? Have the states in India converged or diverged in terms of economic growth during globalisation? What are the characteristics of the emerging employment scenarios 7in India? Which sectors or sub-sectors have experienced faster employment growth during globalisation? What is the degree of employment diversification among workers? What are the determinants of employment diversification? How have modes of employment (an indicator of employment quality) changed during the period of globalisation? What determines the workers’ choice of mode of employment? Has there been any change in the age composition of workers in the era of globalisation? Have female workers faced discrimination in employment? What accounts for many women abstaining from the labour force in recent years? What has been the employment growth for workers from various social and religious groups during globalisation? What have the values of employment elasticities been in different sectors during globalisation? What are the emerging sectors of the economy that favour employment expansion? What is the relationship between income growth and employment in India? What has been the employment performance of the states when considered separately from the quantitative and qualitative dimensions of employment? What are the implications of current growth processes for the future expansion of productive employment?
1.2 Data Sources and Methodology
Our study relies entirely on secondary data. We examined issues such as income growth, interstate disparity, and sectoral performance using GSDP/NSDP data from the Reserve Bank of India (RBI) from 1980–81 to 2023–24. The analysis of employment-related issues spans the period from 1983 to 2023–24. We utilise data from the reports along with the ‘unit-level’ data from the employment and unemployment surveys for the 38th (1983), 50th (1993–94), 55th (1990–00), and 68th (2011–12) rounds, conducted by the National Sample Survey Office (NSSO). Additionally, unit-level data from the Periodic Labour Force Surveys (PLFS), also conducted by the NSSO, for 2017–18 and 2023–24 are used.5 An advantage of the employment data from NSSO surveys is that they have generally utilised a common conceptual framework for estimating the number of employed and unemployed individuals across all their surveys, facilitating inter-temporal comparisons of employment outcomes.6 Furthermore, unlike the Census of India data, 8the NSSO’s estimates of employed individuals or workers are comprehensive and include most workers who contribute to the production of goods and services in the country, thereby alleviating concerns about underestimating any worker group in the context of the NSSO data.7
The following methodological aspects of this study are worth noting:
- Firstly, as the GSDP/NSDP data are available at different base year prices, we have reconstructed the series for our entire study period (1980–81 to 2023–24) in 2011–12 base year prices using the ‘splicing method’. This has facilitated the inter-temporal comparison of the growth of GSDP/NSDP, which we calculated for various periods.
- Second, the NSSO data on employment and unemployment are available according to three definitions: usual status (US), current weekly status (CWS),8 and current daily status (CDS).9 The employed individuals in the US are further categorised into usual principal status (US-PS) workers and usual subsidiary status (US-SS) workers. Those classified as employed according to US-PS are individuals engaged in any economic activity for a relatively longer duration during the 365 days preceding the survey date. In contrast, individuals classified as employed according to the US-SS were categorised as unemployed under the US-PS definition but engaged in some economic activity in a subsidiary capacity. In this study, we have considered data based on the usual principal plus subsidiary status (UPSS) to enhance our understanding of the evolving employment scenarios in India and its states. This is because data based on this concept are considered more helpful for understanding inter-temporal changes in employment characteristics than those derived from a weekly or daily status basis (Chadha, 2000).
- Third, for the analysis, we calculated the absolute numbers of employed (or workers) at our selected time points after adjusting the data obtained from NSSO reports or estimates generated using ‘unit-level’ data. This is necessary because 9NSSO data underestimates the country’s population during survey years, and NSSO reports on employment/unemployment provide data in the form of ‘rates’ – labour force participation rate, workforce participation rate, and unemployment rate. To determine the absolute numbers of employed and unemployed individuals across India and its states, we first calculated population levels at the midpoints of our selected years (i.e., on 1 July 1983, 1 January 1994, 1 January 2000, 1 January 2012, 1 January 2018, and 1 January 2024).10 For this purpose, we used population data from the reports/website of the Census of India for the years 1981, 1991, 2001 and 2011, as well as the report titled Population Projections for India and States 2011–2036, released by the Ministry of Health & Family Welfare, Government of India, New Delhi. Using these data, we calculated the annual compound growth rates of population for the decades between 1980 and 2030, which we subsequently used to estimate, by interpolation, the population figures corresponding to the midpoints of the reference years. After obtaining the population figures, we utilised the NSSO data on the ‘rates’ to ascertain the absolute numbers in the labour force and workforce, separately for each gender, region, caste, and religion. These absolute figures have been used to calculate growth rates for the pre- and post-globalisation periods, as well as for various sub-periods of the post-globalisation era.
- Fourth, in contrast to studies that consider the population aged 15 and over,11 this study considers the entire population to understand the changes in employment scenarios. We do this because participation in the labour force and workforce is not necessarily absent for those under fifteen. Moreover, considering the entire population helps to obtain a more complete picture of the subject of our enquiry.
- Fifth, to ensure inter-temporal comparability among the states regarding employment, we adjusted data from 2011–12 onwards. As the states of Jharkhand, Uttarakhand, Chhattisgarh, and Telangana were carved out of Bihar, Uttar Pradesh, Madhya Pradesh, and Andhra Pradesh, respectively, we merged Bihar with Jharkhand, Uttar Pradesh with Uttarakhand, Madhya Pradesh with Chhattisgarh, and Andhra Pradesh with Telangana. These merged states are considered for analysis from 1983 to 2017–18 (Chapters 3–6). However, in Chapter 7, while analysing the most recent changes in employment from 2017–18 to 2023–24, we provided information on the merged and unmerged states.
- Sixth, although this study’s reference period extends from 1980–81 to 2023–24, limited by the years of NSSO surveys, the employment issues have been analysed 10from 1983 to 2023–24. The period before 1993–94 is regarded as pre-globalisation, while the period following 1993–94 is termed post-globalisation. However, in Chapters 3 through 6, we have compared the periods from 1983 to 1993–94 and from 1993–94 to 2017–18, as some striking changes in employment scenarios seem to be emerging after 2017–18.12 Consequently, we have dedicated a separate chapter (Chapter 7) to provide a thorough overview of employment changes between the 2017–18 and 2023–24 periods.
- Throughout this study, except for 1983, where the NSSO survey’s reference period was January to December, the latest calendar year has been reported for all years (for example, 1994 for 1993–94, 2012 for 2011–12, and so on) for brevity.
- Lastly, it is essential to clarify that our study is empirical and aims to understand the changing employment scenarios at the all-India and state levels during the era of globalisation. We will compare these scenarios with those that existed before the adoption of economic reforms and globalisation policies. This approach provides a concrete understanding of how globalisation has transformed the country’s employment landscape. The empirical data we used have been analysed rigorously, including the application of statistical and econometric tools where necessary.
- 1 The debate regarding the relative efficacy of demand-side and supply-side policies is essential for developing effective economic strategies within a nation. In India, economists such as Amit Bhaduri, Prabhat Patnaik, and Deepak Nayyar strongly advocate for demand-side policies, emphasising their capacity to create jobs and enhance living standards for a broader segment of the population. Conversely, proponents of supply-side policies, including Jagdish Bhagwati and Arvind Panagaria, present persuasive arguments in their favour. Since the onset of liberalisation and globalisation, subsequent governments have primarily focused on supply-side measures. However, analysing the growth transitions from 1950 to 2020, Balakrishnan et al. (2021) argue that while liberalising reforms have accelerated growth in India, persistent obstacles to growth still exist that cannot be addressed solely by neo-liberal or supply-side policies. They suggest that the growth experiences of East Asian countries may offer insights into how to tackle the challenge of low per capita income levels in India, even amidst ongoing and accelerating growth.
- 2 The evolution of employment strategies in post-independence India is influenced as much by socio-economic challenges as by the ideological predilections of the policy planners. Here’s a summary of the approach to employment since the start of the planning era: In the initial four Five-Year Plans, spanning the period until the early 1970s, employment was viewed as a derivative of economic growth. Achieving high GDP growth was anticipated to create more employment opportunities, reducing the need for specific employment strategies. The Fifth Five-Year Plan (1974–1979) marked a shift by aligning developmental policies with employment-focused growth, introducing various anti-poverty initiatives and employment generation programmes. This focus persisted until approximately the mid-1980s. Notably, for the first time, the Seventh Five-Year Plan (1985–1990) positioned employment as a central component of the development strategy, establishing a declared objective of achieving a 4 % annual growth rate in employment. The Eighth Five-Year Plan (1992–1997), coinciding with the implementation of economic reform policies, conducted a comprehensive assessment of employment and unemployment trends in the country. This plan was the first to address employment as a separate chapter within the document. It set a target for annual employment growth of 2.6 % to 2.8 % to achieve ‘employment for all’ by 2002. The Ninth Five-Year Plan (1997–2002) adopted an employment-led growth strategy and recognised employment as one of the critical dimensions of state policy. Nevertheless, by the late 1990s, it became apparent that the nation was facing significant employment challenges, particularly in rural areas, despite achieving higher GDP growth. In response, the Tenth Five-Year Plan (2002–2007) aimed to further realign the growth strategy to enhance its employment content. This plan’s employment policy is primarily guided by the report titled “Special Group on Targeting Ten Million Employment Opportunities Per Year” (Government of India, 2002). A pivotal development during this period was the enactment of the National Rural Employment Guarantee Act (NREGA) by the first United Progressive Alliance government. The Eleventh Five-Year Plan (2007–12) adopted the strategy of ‘inclusive growth’, emphasising the effective reduction of poverty by creating productive employment opportunities accessible to all citizens. The Twelfth Five-Year Plan (2012–2017) continues with ‘inclusive growth’ as a key development goal. The current government’s approach, encapsulated by the mantra Sabka Saath, Sabka Vikas, and Sabka Vishwas, also highlights the significance of expanding employment opportunities.
Thus, there has been no shortage of efforts at the policy-making level to improve the employment situation in India. Despite these efforts, employment remains a significant concern. This understandably raises questions about the effectiveness of neo-liberal economic policies, pursued with increasing vigour by successive governments since the early 1990s, in addressing the employment issue.
Chapter 2 Economic Growth and Interstate Disparity in India
2.1 Introduction
Following independence, India focused its planning efforts on accelerating economic growth to achieve social and economic development. Policymakers believed that breaking the profoundly entrenched cycle of poverty and inequality, which had resulted from centuries of colonial rule, required the establishment of strong and sustainable economic growth (Bhagwati, 1998). They recognised that merely redistributing income would only offer a temporary solution. The state-led initiatives during this period underperformed, resulting in an average annual growth rate of approximately 3.5 % until the 1970s. However, over the following decades, significant political and economic changes at the national and international levels substantially increased the growth rate. Despite this growth, it proved unsustainable, leading to a severe balance of payments crisis and an external debt trap. Various policies and corrective measures were introduced in the early 1990s under the guidance of the World Bank and the International Monetary Fund to revive the economy during this crisis. These initiatives were part of India’s broader efforts to globalise its economy. The aim was to implement substantial structural changes, stimulate sustainable and robust economic growth, and address socio-economic challenges to promote overall development.
Research indicates that the period following the globalisation of the Indian economy, also known as the adoption of economic reform policies since the early 1990s, is characterised by a significantly increased growth rate, as evidenced by studies conducted by Ahluwalia (2000, 2001), Shetty (2003), Ahmed (2007), Kumar & Subramanian (2012), Raju (2012), Rangarajan & Srivastava (2017), Balakrishnan et al. (2021), amongst others. These reforms, which included liberalisation, privatisation, and deregulation, effectively spurred economic activity and 12led to a surge in gross domestic product growth. However, as time progressed, it became evident that this impressive growth momentum did not align with broader socio-economic objectives, such as poverty alleviation, income equality, and improved living standards for all citizens. This compelled the government to redirect its policies towards fostering pro-poor growth, ensuring that the benefits of economic growth were deliberately and strategically allocated to uplift marginalised and underprivileged groups. However, fulfilling this vision proved challenging in the long term, mainly because of the large scale and diversity of the targeted populations. As a result, India adopted an ‘inclusive growth strategy’ since the Eleventh Five-Year Plan, a multifaceted approach aimed at involving all social segments in the development process. This strategy emphasised the importance of creating opportunities for everyone to participate in economic activities, especially for those traditionally excluded from the growth narrative. By promoting equitable access to resources, education, skills training, employment opportunities, health, and other essential services, the inclusive growth strategy aimed to ensure that the benefits of economic expansion were broadly shared, thereby fostering a more balanced and sustainable development framework throughout the country.
As economic reform policies were introduced, the economy evolved into a market-driven system with limited government intervention. This change heightened competition and exacerbated inequality among states, regions, and social groups. Research conducted by Bhattacharya & Sakthivel (2004), Ramaswamy (2007), Kar & Sakthivel (2007), Bakshi et al. (2015), Ghose (2023), Bharti et al. (2024), among others, has established clear evidence of increasing inequality across various states and segments of the population. Furthermore, by using the neoclassical growth model as a guiding framework, researchers have employed statistical methods to examine whether growth rates across states converge or diverge. In the early years following the reforms, two notable studies by Cashin & Sahay (1996) and Nagaraj et al. (1997) provided evidence of convergence. In contrast, later research by Marjit and Mitra (1996), Ghosh et al. (1998), Rao et al. (1999), Dasgupta et al. (2000), and Sanga & Shaban (2017) indicated a clear divergence among Indian states.
Given the vastness and diversity of the Indian economy, a comprehensive investigation into issues related to reform-driven growth at both aggregate and disaggregate levels, utilising recent data, is essential. This chapter analyses the gross domestic product (GDP), net state domestic product (NSDP), and per capita NSDP (PCNSDP) data available from the Reserve Bank of India (RBI) website to examine the growth dynamics of the Indian economy and its major states from 1981 to 2024, focusing mainly on the post-globalisation 13period. We aim to identify the sectors and sub-sectors that influence changes in income growth, if any, at the national level and within individual states. Additionally, we assess the extent of interstate disparity and explore whether there is regional convergence or divergence in the growth rates of per capita net state domestic product, while identifying factors that explain the disparities in PCNSDP between states.
Using the ‘splicing method’, the entire series of the NSDP and PCNSDP has been adjusted to a base of 2011–12 at constant prices. The growth rates have been estimated by fitting two-kink exponential or simple exponential models, following the methodology developed by Boyce (1987). In this chapter, the period from 1981 to 1993 is referred to as the pre-globalisation period, and the period from 1994 to 2024 is the post-globalisation period. The post-globalisation period has been divided into two sub-periods, 1994–2011 and 2012–2024, to determine whether growth performance has changed over time during the post-globalisation phase.1
2.2 Growth of Net State Domestic Product (NSDP)
Economic growth refers to the increase in the market value of goods and services produced by a nation over a specific period. Although it does not fully capture the population’s overall well-being, it provides insights into the nation’s economic conditions. Table 1 illustrates economic growth by showing the growth rates of NSDP in India and the individual states during the pre- and post-globalisation periods. During the pre-globalisation period (1981–1993), the national GDP growth rate was 4.93 %, significantly higher than the average 3.5 % growth rate experienced during the first three decades following independence, commonly referred to as the ‘Hindu rate of growth’. Between 1981 and 1993, the state with the highest growth rate was Maharashtra, at 6.07 %. Other states that achieved growth rates above the national average included Rajasthan (5.82 %), Andhra Pradesh (5.42 %), Tamil Nadu (5.04 %), and Haryana (4.97 %). Conversely, the state with the lowest growth rate was Bihar (1.88 %), while additional states that exhibited low growth rates during this period included Odisha (2.59 %), Jammu & Kashmir (2.59 %), Assam (2.82 %), and Kerala (3.36 %).14
State |
1981–1993 |
1994–2011 |
2012–2024 |
1994–2024 |
1981–2024 |
|||||
|---|---|---|---|---|---|---|---|---|---|---|
Gr. Rate |
Rank |
Gr. Rate |
Rank |
Gr. Rate |
Rank |
Gr. Rate |
Rank |
Gr. Rate |
Rank |
|
Andhra Pradesh |
5.42 |
3 |
6.13 |
9 |
6.40 |
8 |
6.24 |
7 |
6.00 |
5 |
Assam |
2.82 |
14 |
3.53 |
20 |
6.79 |
6 |
4.88 |
18 |
4.28 |
15 |
Bihar |
1.88 |
17 |
5.42 |
11 |
6.35 |
9 |
5.80 |
11 |
4.66 |
14 |
Gujarat |
4.78 |
7 |
7.63 |
1 |
8.87 |
1 |
8.14 |
1 |
7.16 |
1 |
Haryana |
4.97 |
5 |
7.38 |
2 |
6.82 |
4 |
7.15 |
2 |
6.51 |
2 |
Himachal Pradesh |
4.65 |
8 |
6.90 |
4 |
5.86 |
11 |
6.47 |
4 |
5.94 |
6 |
Jammu & Kashmir |
2.59 |
15 |
4.83 |
17 |
4.15 |
18 |
4.55 |
19 |
3.98 |
17 |
Karnataka |
4.60 |
9 |
6.29 |
7 |
6.58 |
7 |
6.41 |
6 |
5.88 |
7 |
Kerala |
3.36 |
13 |
4.53 |
19 |
4.08 |
19 |
4.34 |
20 |
4.06 |
16 |
Madhya Pradesh |
4.05 |
11 |
5.31 |
14 |
6.97 |
2 |
6.00 |
8 |
5.43 |
8 |
Maharashtra |
6.07 |
1 |
7.17 |
3 |
5.43 |
14 |
6.45 |
5 |
6.34 |
3 |
Odisha |
2.59 |
16 |
5.34 |
13 |
6.80 |
5 |
5.94 |
9 |
4.96 |
11 |
Punjab |
4.53 |
10 |
4.96 |
16 |
5.33 |
15 |
5.11 |
15 |
4.94 |
12 |
Rajasthan |
5.82 |
2 |
5.41 |
12 |
4.53 |
16 |
5.04 |
16 |
5.27 |
9 |
Tamil Nadu |
5.04 |
4 |
6.90 |
5 |
6.83 |
3 |
6.87 |
3 |
6.34 |
4 |
Uttar Pradesh |
3.88 |
12 |
4.56 |
18 |
5.67 |
13 |
5.02 |
17 |
4.69 |
13 |
West Bengal |
4.93 |
6 |
6.18 |
8 |
3.90 |
20 |
5.24 |
14 |
5.15 |
10 |
Jharkhand |
– |
– |
5.04 |
15 |
5.81 |
12 |
5.36 |
13 |
– |
– |
Chhattisgarh |
– |
– |
5.49 |
10 |
6.23 |
10 |
5.80 |
12 |
– |
– |
Uttarakhand |
– |
– |
6.84 | |||||||
Details
- Pages
- XXIV, 470
- Publication Year
- 2026
- ISBN (PDF)
- 9781805841395
- ISBN (ePUB)
- 9781805841401
- ISBN (Softcover)
- 9781805841388
- DOI
- 10.3726/b23218
- Language
- English
- Publication date
- 2026 (February)
- Keywords
- Globalisation Economic Growth Labour Force Participation Employment Growth Employment Quality Employment Diversification Labour Market Inequalities Globalisation, Economic Growth, and Employment in India Sankar Kumar Bhaumik
- Published
- Oxford, Berlin, Bruxelles, Chennai, Lausanne, New York, 2026. xxiv, 470 pp., 3 fig. b/w, 119 tables.
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