Economic Reforms and Employment Growth in India : An Empirical Analysis

The present study attempted to estimate the impact of economic reforms on employment growth in the organized sector using the data for a period of 40 years from 1970-71 to 2009-10 by applying a dummy variable approach. It was found that though an increase in absolute terms was observed in employment growth, the growth in relative terms was miserable. Employment growth in the private sector increased at a rate of 2.8% with a marginal rate of acceleration at 0.02 % while the same in the public sector and in the organized sector as a whole witnessed a deceleration at a rate of 0.08% and 0.05%, respectively during the study period. While employment growth in the private sector marked an increase, employment growth in the public sector declined significantly during the post-reform period in the country. The public sector is no longer seen as an employment provider; it has, in fact, experienced an absolute decline in employment in recent years. Faster economic growth resulting from liberalization is, however, expected to lead to the expansion of employment. Economic growth rate has accelerated, but employment growth has seen a deceleration.