Trade and Development Review, Vol 12, No 1 (2019)

High Growth and Stagnant Employment in India: A Macro-Theoretic Analysis

Dipti Ghosh, Ambar Nath Ghosh


Employment in the organized sector in India has been stagnant since 1991 even though GDP in general and organized sector in particular have grown at high rates. Obviously, there has been taking place labour saving technological and managerial changes along with growth in the organized sector. We are concerned here about how this kind of technological and managerial changes is likely to affect India. The objective of this kind of technological and managerial changes is to eliminate the bargaining strength of the workers and bring about a decline in the shares of workers of the organized sector in the output of the organized sector. This paper develops a simple macro model suitable for a country like India to show how these changes generate strong recessionary forces slowing down the growth rates of both the organized and the unorganized sector. It also seeks to suggest policies for generating employment in both the sectors.

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