Employment generation is one of the major priorities drawing the attention of the governments and economic planners all over the world, India being no exception. Thus, in the Five Year Plans, the generation of employment was viewed as part of the process of development. It was, however, observed that the rate of growth of employment was generally much lower than the GDP rate of growth of the economy. Seasons of severe drought and failure of monsoons exposed large sections of population to extensive deprivations and compounded the situation. Successive plan strategies, policies were, redesigned to bring about a special focus on employ-ment generation as a specific objective.

The seventies and eighties saw the emergence of special schemes like NREP, RLEGP to provide wage employment through public works schemes to promote self-employment and entrepreneurship to the unemployed and the poor. Employment levels expanded steadily during the seventies and eighties but the rate of growth of employment continued to lag behind that of the labor force.

India’s labor force is growing at a rate of. 2.5 percent annually, but employment is growing at only 2.3 per cent. Sixty per cent of India’s workforce is self-employed; many of them remain very poor. Nearly 30 per cent are casual workers who are only seasonally employed. In the rural areas, agricultural workers form the bulk of the unorganized sector. Unorganized sector is also made up of jobs in which the Minimum Wage Act is either not, or only marginally, implemented.

With the opening of Indian economy and linking it to global economics, the decline in employment growth has been seen in conjunction with the decline in the labor force growth rate.  While there may be divergence of opinion on the extent of under employment and unemployment, there is convergence of views on the need to expand employment. In order to achieve this goal, the economists have emphasized that any programme for this purpose must focus on growth, labor productivity and relative price of labor and capital. Sector specific policies are required which would accelerate the growth of labor intensive sectors, these include among others agriculture, food process¬ing and small-scale units in various sectors.

One of the most significant interventions by the government to generate employment has been the launch of the National Rural Employment Guarantee Act February 2006 in two hundred most backward districts of the country. Consequently, the scheme was extended to another 130 districts and from April 2008 it would be operative in all districts. One significant factor in the employment situation in the country is that the bulk of employment is in the unorganized sector. There has to be an endeavor to shift as much of labor force as possible from the unorganized to the organized sector. This would give workers a better deal in terms of wages. This is possible only if the rigidities in the labor market are relaxed and wage determination begins to reflect the resource endowment in the country. This would encourage establishments to adopt labor intensive technologies.