Poverty and Unemployment in India: A One-Page
Report (June 2025)
India, a nation with a vast and youthful population, continues to grapple with the intertwined
challenges of poverty and unemployment. While significant strides have been made in
economic growth and poverty reduction over the past decades, these issues remain critical
barriers to inclusive development and the full realization of human potential.
Poverty in India:
Current Status:
Recent reports indicate a positive trend in poverty reduction. The State Bank of India (SBI)
estimates India's poverty rate is likely to decline to 4.6% in 2024, down from the World Bank's
2023 estimate of 5.3%. This progress is attributed to economic reforms, targeted welfare
schemes, and improved data collection methodologies, such as the Modified Mixed Recall
Period (MMRP) in household consumption surveys. Despite this decline, a substantial number
of people still live below the poverty line, particularly in rural areas and among marginalized
communities.
Causes of Poverty:
● Economic Inequality: Unequal distribution of wealth and resources, with a significant
concentration among the top earners, limits opportunities for the majority.
● Low Agricultural Productivity: Reliance on traditional methods, fragmented
landholdings, and lack of capital lead to low yields and income for a large segment of the
rural population.
● Limited Access to Quality Education and Healthcare: These factors perpetuate a
cycle of poverty by hindering skill development and leading to health-related financial
burdens.
● Informal Sector Dominance: A large portion of the workforce is engaged in the informal
sector, characterized by low wages, lack of job security, and no social safety nets.
● Social Inequality: Historical and ongoing discrimination based on caste, gender, and
religion restricts access to opportunities for marginalized groups.
● Population Growth: While India's population growth is slowing, its sheer size continues
to exert pressure on resources and employment opportunities.
Government Poverty Alleviation Schemes:
The government has implemented numerous programs to address poverty, including:
● Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA):
Guarantees 100 days of wage employment in rural households.
● Pradhan Mantri Jan Dhan Yojana (PMJDY): Aims for financial inclusion through
banking services.
● Pradhan Mantri Awas Yojana (PMAY): Provides affordable housing for the rural and
urban poor.
● National Rural Livelihoods Mission (NRLM): Focuses on organizing rural poor into
Self-Help Groups (SHGs) for livelihood enhancement.
● National Food Security Act (NFSA): Ensures access to subsidized food grains.
Unemployment in India:
Current Status:
As of April 2025, India's unemployment rate (UR) for individuals aged 15 years and above
stood at 5.1%, according to the Ministry of Statistics and Programme Implementation (MoSPI).
The Economic Survey 2024-25 highlighted a significant reduction in the unemployment rate to
3.2% in 2023-24 from 6% in 2017-18, driven by post-pandemic recovery and formalization.
However, concerns remain regarding underemployment and the quality of jobs created.
Causes of Unemployment:
● Slow Economic Growth (relative to labor force expansion): The pace of job creation
has not always kept up with the rapid growth of the labor force, particularly the youth
demographic.
● Defective Education System and Skill Mismatch: The existing education system often
lacks vocational and technical training, leading to a mismatch between the skills of
graduates and the demands of industries.
● Seasonal Nature of Agriculture: A large portion of the workforce in rural areas
experiences seasonal unemployment due to the nature of agricultural work.
● Decline of Cottage and Small Industries: The shift towards large-scale industries and
changing consumer preferences have led to the decline of traditional small-scale
enterprises, impacting local employment.
● Low Investment and Capital Formation: Insufficient investment, particularly in
labor-intensive sectors, limits job creation.
● Limited Labor Mobility: Social and cultural factors, as well as language barriers, can
restrict the movement of labor to areas with more job opportunities.
● Impact of Automation and Technology: While beneficial, automation in some sectors
can displace labor, requiring continuous upskilling.
Government Employment Generation Schemes:
● Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA): As
mentioned for poverty, it also serves as a crucial employment safety net.
● Pradhan Mantri Kaushal Vikas Yojana (PMKVY): Focuses on skill development and
vocational training for youth.
● Pradhan Mantri Employment Generation Programme (PMEGP): Promotes
self-employment through financial assistance for setting up micro-enterprises.
● National Career Service (NCS) Project: A digital platform for job matching, career
counseling, and skill development information.
● Atmanirbhar Bharat Rojgar Yojana (ABRY): Incentivizes employers for new
employment generation.
● Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY): A placement-linked
skill development program for rural poor youth.1
Conclusion:
While India has demonstrated progress in reducing poverty and improving employment
indicators, both remain critical areas requiring sustained policy attention. Addressing the root
causes of economic disparity, investing heavily in quality education and skill development
aligned with industry needs, promoting labor-intensive growth, strengthening social security
nets for the informal sector, and fostering an environment conducive to entrepreneurship are
essential steps to ensure inclusive growth and provide decent work opportunities for all
citizens.
