Tag: R&D Development

When India gained Independence in 1947, there were numerous challenges that the new republic was facing. Creating appropriate employment opportunities for its population was one of those biggest challenges. The long British colonial rule had wrecked the economy, which meant that India had to begin from the beginning to rebuild.

Over the decades, the nature and structure of unemployment in India has changed. It has reflected the economic transformation in the country and the policy interventions. At the same time, shifts in global power, technological advancements and other factors have also had a huge impact on India’s employment landscape.

Historical Trends

During the early years of Independence, as mentioned above, India faced many challenges including high unemployment rates. The measurement of unemployment during this time was also done through rudimentary methods, mainly based on census data and some surveys. This meant that the nuances of unemployment were not observed at the time while the focus was solely on finding out how many people were out of work. It took India some time to develop the right tools and processes to gauge the depth of the problem in order to create effective solutions.

In the 1970s and 1980s, the National Sample Survey Office (NSSO) began conducting more comprehensive surveys, providing a clearer picture of unemployment. Some new processes like understanding the Current Daily Status and the Usual Status helped with more nuanced exploration of unemployment patterns in the country.

One of the biggest shifts in the Indian employment landscape happened after the liberalisation of the economy in 1990. The policy change created big changes in the labour market as the Indian economy was opened to international trade which meant companies from around the world could now establish their presence in the country. This led to widespread employment generation in the following decades. The shift from an agrarian economy to a more industrial and service-oriented one led to changes in employment patterns.

During this time, the NSSO surveys also kept evolving with new methodologies introduced in them to improve efficiency of the data collected. In 2017, Periodic Labour Force Survey (PLFS) was introduced which further refined the measurement process of unemployment in the country through quarterly assessment and including informal employment too.

Unemployment in India and Changes in Labour Market

While the measurement of employment saw massive shifts in the decades following Independence, the labour market also evolved with changing conditions. One of the biggest shifts was moving from a predominantly agrarian economy to creating opportunities in the industrial sector. In the 1950s, agriculture accounted for over 70% of employment, but this has declined to around 42% in recent years.

Another change that has happened in the last two decades is the impressive growth in the services sector like Information Technology (IT). This has created new opportunities for Indian youth and has also established India as a reliable centre for skilled workforce in these industries.

Another factor that has played a crucial role during this time is urbanization. As more and more people migrated from rural parts of the country to the cities, it led to an expansion of the informal sector. According to the International Labour Organization (ILO), around 81 per cent of India’s working population is employed in the informal sector. While it is a great source of employment for millions of Indians, there are also concerns regarding the poor working conditions and lack of job security.

Lately, with the rise of technology-based startups in the country, the gig economy has also ballooned which has created more employment. However, it has also been mostly informal in nature, not providing the workers necessary benefits and security.

Unemployment Numbers Over the Years

Now that we have understood the changes in the unemployment landscape and measurement techniques over the decades, let us see how the unemployment rate in India has fluctuated over time.

1960s-70s: While the data is sparse and not reliable, some estimates suggest that the majority of the population was employed in the agriculture sector, which meant that the actual unemployment rate at the time was relatively low, around 2-3 percent. However, there was no way to measure issues like seasonal unemployment and nuances of poverty at the time.

1980s: During this decade, the recorded unemployment rate remained low at around 2.8 per cent according to the World Bank data. This can be attributed to the same factors that majority of people were employed in the agriculture sector and the measurement of employment was primarily done through rudimentary tools like surveys.

1990s: This was the time of post-liberalisation which witnessed the biggest shifts in the labour market. New opportunities created by liberalisation pushed people from rural areas to migrate to cities in search of better jobs and incomes. It could also be that the government had gauged the rural distress and brought this significant change in India’s economic policy due to the increasing unemployment which was not being measured by the surveys in the past. This is perhaps the reason behind the increase in unemployment rate at the time which reached around 7 per cent.

2000s: The Indian economy benefitted from liberalisation in the following decades and the unemployment rates fell in the following years. At this time, the recorded unemployment rate was between 4-5 per cent. However, it fluctuated a lot as the world witnessed the global financial crisis in 2008.

2010s: During this decade, the unemployment rate remained stable at around 5-6 per cent. However, the introduction of PLFS revealed a bleaker picture with the unemployment rate at 6.1 per cent in 2017-18.

2020s: The unemployment rates peaked at this time because of the covid-19 pandemic and the subsequent impact on the world economy as well as Indian economy. The lockdown halted all the activities severely impacting those working in the informal sector. The unemployment measurement also paused during this time. However, the economy has recovered gradually since 2022 and the unemployment rate is again stabilising.

Challenges in Addressing Unemployment

Even today, with all the transformations and policy interventions, India continues to struggle with the problem of unemployment. The growth is often seen as V-shaped with the rich becoming richer and the poor becoming poorer. The unemployment rate for the younger population is higher than the national average and the lack of new opportunities is a grave concern for the country.

At the same time, the dominance of the informal sector in providing the majority of jobs is a concern too because of the job security issues and the poor working conditions. Gender disparities in employment also persist. Women’s labour force participation rate in India is among the lowest in the world, with cultural and social norms often restricting women’s access to employment opportunities. Addressing these disparities is crucial for achieving inclusive economic growth.

Solutions and Future Scenario

To address these challenges, there needs to be a concerted effort to improve the measurement techniques and to provide better job opportunities. Here are some of the immediate steps that can be taken:

1. Skill development: Investing in education and skill development is essential to bridge the skills gap and enhance employability. There are many initiatives like the Skill India Mission which aim to provide vocational training to millions of young people to prepare them for the modern job market. Putting stronger emphasis on STEM (Science, Technology, Engineering and Mathematics) education can also prepare the workforce for emerging industries.
2. Promoting Entrepreneurship: A good way to create job opportunities is to start new businesses. Government programmes like Startup India and the Atal Innovation Mission provide support to startups and entrepreneurs. Access to credit and financial services for small and medium enterprises (SMEs) is also crucial for promoting entrepreneurship. More work should be done in this area to support entrepreneurs from rural areas and those who are not connected to the urban networks.
3. Strengthening Rural Economy: Rural unemployment is one of the biggest challenges for India and it also needs to reduce the burden of migration to ensure that the growth is sustainable. Initiatives like MNREGA work towards addressing this issue. However, bringing in more investments in rural areas can further help with strengthening the rural economy.
4. Supporting Informal Sector: Government needs to come forward and institute checks and balances ensuring that the workers in the informal sector have the right security and benefits. More and more work should be done to formalize the informal sector by providing social security benefits, access to credit and skill development. Minimum wages and redressal mechanisms for workers can also help in bringing in more structure to the informal sector.
5. Leveraging Technology: One of the biggest opportunities available to us today is the new technology that is rapidly changing and how we can use it for our benefit. We have already seen innovations in India in digital payments that have provided a boost to the economy. Also, the growth of the gig economy, driven by platforms like Uber and Swiggy, has created flexible job opportunities for many. However, ensuring fair wages and social protection for gig workers is essential.

By addressing the challenges and implementing these solutions, India can make the most of the demographic dividend that it has right now. The country can use its young population to grow the economy and improve the lives of millions in the near future.

Research and Development (R&D) is the backbone of innovation, economic growth, and societal progress. It drives advancements across industries, leads to new products, and fosters technological growth. For a country like India, with its vast pool of talent and growing economic potential, investing in R&D is crucial. Innovation is rightly acknowledged as a driver of economic growth, and Prime Minister Narendra Modi appropriately extended Lal Bahadur Shastri and Atal Bihari Vajpayee’s slogan, “Jai Jawan, Jai Kisan, Jai Vigyan,” to include “Jai Anusandhan” (research and innovation).

While India has made notable strides in sectors like IT and pharmaceuticals, the broader landscape of R&D still needs to catch up with the global standards. Countries that prioritise R&D, such as the United States, South Korea, and Germany, have emerged as leaders in technology, industry and global influence. In contrast, India’s R&D spending remains underwhelming, which holds back its potential for innovation and development. Thus, exploring why India needs to pay more attention to R&D is a necessity.

The current landscape of R&D in India

India’s R&D landscape has witnessed improvements, yet it remains a mixed bag. According to data, India spends less than 1% of its GDP on R&D, whereas countries like Israel and South Korea spend over 4%. The government and public sector are the main contributors, with private sector investment lagging. India has also developed strong institutions like the Indian Institutes of Technology (IITs) and the Council of Scientific and Industrial Research (CSIR). However, the connection between academic research and industrial application is still weak, limiting the practical impacts of these institutions’ innovations. Furthermore, while India’s talent pool is vast, the brain drain to countries with better research infrastructure remains a significant challenge.

Why does India still lag?

India’s lower investment in R&D is often cited as the primary reason for its lagging innovation landscape. However, the problem runs deeper. Bureaucratic red tape, a risk-averse private sector, and a focus on short-term returns over long-term innovation are key hurdles. There is inadequate collaboration between academic institutions and industries, making it difficult to convert theoretical research into practical applications. Moreover, the education system is often criticised for prioritising rote learning over creative problem-solving, hindering innovation at its roots.

Additionally, India’s focus on labour-intensive industries means less emphasis is placed on automation and research-heavy sectors. Thus, even though India produces a significant number of engineers and scientists, the opportunities for them to engage in cutting-edge research within the country are limited.

Where do India stand in comparison with global R&D leaders

When comparing India with countries that have excelled in R&D, the differences are stark. Countries like the United States, Germany, Japan and South Korea are global leaders in R&D, not just because of their investment but also because of the collaborative ecosystems they have built. In these countries, there is a seamless connection between academia, government, and the private sector, ensuring that research leads to innovation.

For instance, South Korea invests heavily in R&D, focusing on electronics, telecommunications, and advanced manufacturing. This has transformed it into a global tech giant, home to companies like Samsung and LG. The country’s emphasis on innovation-driven growth has allowed it to create high-paying jobs, boost exports, and significantly raise its standard of living. Similarly, Germany’s focus on engineering, automotive, and green technologies, combined with government incentives for private sector R&D investment, has made it a leader in industrial innovation.

Why should India prioritise it?

India’s demographic dividend presents a unique opportunity that can only be harnessed through innovation. With a population largely under 35 years of age, the potential to drive technological change is immense. However, without a strong R&D framework, India risks becoming a mere consumer of technologies developed elsewhere rather than a producer.

R&D is essential for solving some of India’s most pressing issues, including healthcare, energy security, climate change, and sustainable agriculture. For example, India’s pharmaceutical industry, known as the “pharmacy of the world,” could push boundaries in drug discovery and biotechnology with more robust research support. In agriculture, improved research could revolutionise water conservation techniques, crop resilience, and yield improvement—vital for a country whose livelihood depends so heavily on farming.

How can India enhance its R&D capabilities?

To fully realise its potential, India needs a multi-faceted approach to strengthening R&D. The current 0.7% of public R&D spending should be increased to at least 3% of India’s GDP to facilitate innovations. Strategies should be developed to reclaim India’s intellectual capital by promoting collaborations and knowledge transfer. Collaborating with countries that are strong in R&D will provide Indian researchers with access to cutting-edge technologies and methodologies.

Mandating 2% of CSR funds for joint research projects with academic institutions will strengthen the industry-academia linkage, while developing a national portal can allow industries to post research problems while academia offers solutions. Introducing mandatory research methodology and scientific writing courses in PhD curricula, alongside a national mentorship program pairing early-career researchers with eminent scientists, will improve the quality of Indian research.

In addition, “Women in STEM” program, gender-sensitive policies can help foster inclusivity. Further, establishing A national IP bank could ease patent licensing, promoting translation of research into marketable innovations. Higher education should be promoted with availability of fellowships and grant programs  to fund research projects spanning multiple disciplines. These steps would significantly improve India’s ecosystem for research and innovation.

In conclusion, for India to thrive in the global economy and tackle its domestic challenges, a robust R&D framework is non-negotiable. While the country has made progress in certain areas, significant gaps remain in terms of investment, industry collaboration, and innovation culture. By enhancing its R&D capabilities, India can transform into a hub of global innovation, creating opportunities for future generations and ensuring sustainable growth for its economy.