UPSC Daily Editorial Analysis | 21 May 2022

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What the article is about?

Talks about the urban unemployment crisis and solutions.

Syllabus: GS-III Issues relating growth and development, employment

Urban crisis:

  • Economic Advisory Council to the Prime Minister released a report on the state of inequality in India.
    • The report, prepared by the Institute of Competitiveness, provides a detailed examination of the existing disparities in society.
    • Based on wage data from the periodic labour force surveys, it has pegged the share of the top 1 per cent at around 6-7 per cent in total income, with the top 10 per cent estimated to earn around 30 per cent.
    • In comparison, the report has pegged the bottom 50 per cent to hold only 22 per cent of income.
    • Alongside, it has also explored inequities in access to health and education facilities.
  • While this is rather commonplace, the more concrete suggestions of the report to tackle the issue of rising inequality in India- these range from putting in place an urban equivalent of MGNREGA to introducing universal basic income- require careful consideration.

Urban employment guarantee scheme:

  • Proponents of this idea have argued that not only would this provide employment during times of distress, but this would also serve as a channel to push funds through quickly in periods of stress.
  • Several states have in fact been experimenting with this concept.
    • Recently, the Rajasthan government announced a scheme for urban areas — the Indira Gandhi Shahri Rozgar Guarantee Yojana — on the lines of MGNREGA.
  • However, there are several problems with replicating the rural employment guarantee programme in urban areas.
    • Such a scheme may simply encourage migration, which without the creation of the attending infrastructure, will only exert further pressure on the crumbling facilities of these cities.
    • In urban areas, there is no such seasonality in either work demanded or unemployment, complicating the design of such a scheme. And moreover, many of the migrant workers are unlikely to have the requisite skills needed for regular jobs in cities.
    • Third, it is also debatable whether the educated but unemployed workers will take up these jobs.
    • Fourth, there are capacity constraints with the urban local bodies, which are likely to be the implementing agencies.
    • More critically, what are the kinds of public works in urban areas?
    • Lastly, there is also the question of financing such a scheme at the national level.


  • India’s job challenge is structural in nature, owing in part to the absence of a labour-intensive manufacturing sector.
  • A more prudent approach would be for economic policy to focus on boosting growth, lowering inequalities in opportunities, improving access to education and health, and providing pathways for upward mobility.

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