🚨 UPSC EXAM NOTES presents the February edition of our comprehensive monthly guide. Access it  to enhance your preparation. We value your input - share your thoughts and recommendations in the comments section or via email at Support@upscexamnotes.com 🚨

Critical Topics and Their Significance for the UPSC CSE Examination on February 24, 2025

Daily Insights and Initiatives for UPSC Exam Notes: Comprehensive explanations and high-quality material provided regularly for students

Were 8 crore new jobs created in three years?

For Preliminary Examination:  Unemployment, Types of Unemployment

For Mains Examination: GS III - Indian Economy

Context:

Prime Minister Modi, based on the India-KLEMS database, claimed that India created “eight crore new jobs in the last three to four years”. However, analysts are questioning the methodology used to estimate these numbers. They argue that little meaningful employment was created in these years

Read about:

What is Unemployment?

Types of Unemployment

Key takeaways:

• India-KLEMS utilizes employment data from the PLFS, but instead of using the absolute number of workers, it relies on the Worker Population Ratio (WPR), which the PLFS provides as the proportion of workers in the population.
• To calculate the total number of workers, the WPR is multiplied by the total population. The challenge arises here because India does not have an official population figure after 2011.
• Demographers typically estimate population figures for years between censuses by interpolating data from the most recent Census. However, India-KLEMS took a different approach by using population estimates from the Economic Survey (ES) 2021-22 for the years 2017-18, 2018-19, and 2019-20.
• The ES projected population by assuming that the growth rates from 2001 to 2011 remained constant after 2011. These population projections were then multiplied by the WPR to estimate the number of workers for those years.
• For the years 2020-21 to 2023-24, India-KLEMS switched to a different source and method, using population projections from 2011-2036 published by the Ministry of Health & Family Welfare (MoHFW) in 2020.
• These projections were based on 2011 Census data and were adjusted annually using demographic models that included Total Fertility Rates (TFR) and mortality rates reported in the 2017 Sample Registration System (SRS).
• The question arises as to why India-KLEMS did not consistently use the MoHFW projections for all years after 2017-18. It seems that while the RBI updates the series with new estimates after 2022, it does not revise or update earlier estimates.
• There are two significant concerns here. First, the population projections from both the ES and MoHFW fail to account for the significant decline in fertility rates in India over the past decade.
• The standard replacement TFR is typically 2.1 children per woman, but recent National Family Health Survey (NFHS) data show that India’s TFR had dropped to 2.0 by 2019-21. Additionally, a 2024 study in The Lancet projected that TFR values in India and Bangladesh would fall below 1.75 by 2027. These declines in TFR were not factored into the population projections by either the ES or MoHFW.
• Second, the population projections from both the ES and MoHFW do not differentiate between rural and urban areas. As a result, India-KLEMS managers used national sex-wise population data, assumed uniform growth rates for rural and urban populations, and derived separate projections for each.
• However, it is well-known that rural populations in India are growing more slowly than urban populations. Assuming the same growth rates for both likely leads to an overestimation of the rural population.
• Due to these two issues, the population figures used to multiply the WPR in India-KLEMS, and the resulting estimates of the number of workers, are likely overestimated