From Employment to Self-Employment

Today, India is enjoying its position as a rapidly growing economy in the world’s arena. It has a vast and dynamic human resource, mainly constituted by its youth population. India is self-assured to be the youngest country in the world by 2022, with the population of its workforce to be around 600 million. Thus, with growing youth population, India’s economy has to suit its burgeoning employment needs too.


Employability is the prioritized concern of every government. The youth population is growing day-by-day, and is currently at a 40 per cent of the total population of India.

Post-independence, a majority of the Indian population diverted towards agricultural practices. But after the industrial revolution in around 1950, we saw the emergence of 39 industrial units and numerous factories getting registered. This evolution witnessed the employment opportunities shifting to the industrial sector. Gradually, over the years, modernization and industrialization gathered momentum. But soon after, the sector started getting over-exploited and opportunities for growth started decreasing.

In today’s time, people have started coming up with new employment needs. This has witnessed a holistic approach towards promoting self-employment.


Indian economy can be seen to possess very unique characteristics. These are the amalgamation of formal-informal, rural-urban, agricultural- non-agricultural, skilled-unskilled components etc. The government should attempt to have a comprehensive approach to address the requirement, i.e. to skill the unskilled workers, to formalize the informal sector and so on. Attempts such as Agri-clinics, Agri-business centres, National Food Security Mission etc. are continuously giving a big boost to non-agricultural employment in rural areas of the country.


The Indian economy was pacing slowly at a growth rate of 5.6 per cent a year, with annual job growth increasing at 2.4 per cent, accounting to 9.7 million jobs per year. Presently, the job growth is around 13 million jobs a year. However, this growth seems to be miniscule, when compared to the youth population of about 423 million, according to the census of 2011. Therefore, to boost the actual employment scenario, the Indian government is gearing up for a number of schemes. This draws a more ameliorating picture of the actual beneficiaries taking benefits of the entrepreneurial self-employment opportunities. The number of self-employed people has gradually increased in the last four years.

In this regard, the government launched the MUDRA banks loan scheme, on 8th April 2015. The MUDRA (Micro Units Development and Refinance Agency) bank facility can be seen as a driving force in providing funds to different customers, micro-finance institutes, small scale industries etc. at lower interest rates. The scheme provides a helping hand to all entrepreneurs seeking employment opportunities, and creates a facilitating environment for job creation all over India. 

MUDRA (Micro Units Development and Refinance Agency) covers three categorically divided loans, viz.   

screen shot 2019-01-11 at 2.31.01 pm

Regional coverage

Region wise performance by banks (No. of accounts)

screen shot 2019-01-11 at 2.21.02 pm Source : Mudra Portal(

These credits augment the investment capacity of every beneficiary and provide a stronger foundation helping more workers gain employment. 

Along with Pradhan Mantri Mudra Yojana, a number of other schemes also facilitate the aspirations of a self- employed to become an entrepreneur, they are:

 (i) Deen Dayal Antyodaya Yojana for RSETI 

The main objective of this scheme is RSETI i.e. Rural Self-employment Training Institutes. This helps in nurturing the dreams of aspiring entrepreneurs to set up micro-enterprises.

(ii) Standup India

 Through this scheme, loans are provided from 50,000 rupees up to 10 lakh rupees. The beneficiaries have been benefited with around 38 crores, in the current year. 

(iii) Aspire

This scheme helps the eligible youth to hone their various skills and set up their own business enterprises. From this scheme, Technology Business Incubators get assistance of 50 per cent of the plant and machinery cost or Rs. 30 lakhs, whichever is less.  

(iv) Pradhan Mantri Employment Generation Programme (PMEGP)

The programme seeks to help different manufacturing units by providing credit of up to 23 lakh rupees. Additionally, projects, which cost up to 10 lakh rupees, are free from collateral security.

    In hindsight, these schemes have proven to be an indicator for the self-employment generated in the economy in the given time frame. According to the Labour Bureau, the average annual daily wage rate in the economy has experienced an increasing trend. The real wages of male workers have gone up for all small-scale occupations. Additionally, this growth has experienced a 9-10 percent increase in the real wage. Thus, it can be said that the self-employment ecosystem in India is paving its way for huge successes in the future.

Over the last three years 12.27 crores rupees of loans have been disbursed where 74% of the total (around 9 crores) consists of women borrowers. Thus, self-employment is accruing at a plunging pace, where people from almost every part of India are participating. This further creates more jobs and establishes a robust employment network in India. Along with these schemes the economy should consider other factors to drive the self-employment growth. They are:

(i) To ease compliance costs

Compliance costs are the cost incurred in conforming to the government’s legislations and regulations. This process is extremely tiresome and expensive. The government should aim to ease it so that the barrier to entering the entrepreneurial sector is removed.

(ii) Showcase more accurate data

The one digit number reflecting the growth in India doesn’t necessarily reflect that all the indicators are doing well. Rather, we can witness that these numbers can to some extent be deceptive. Let’s say, if we study that the real growth rate is 7.6 per cent, we can’t assume that labour productivity in the economy has also grown by the same rate. Hence, the data is not capturing the true picture in all aspects.

Along with the growing opportunities of self-employment, there exists a much intense informal sector simultaneously. It can be observed that we have created an enormous bubble of employment opportunities, which on the other hand is not catering to the wage needs of people below poverty lines. Yes, they earn enough to carry on a living but not to drive themselves out of the poverty. This is one of the big concerns on hand. We see the advent of the gig economy, which is in favour of the contractual work, opposing the idea of permanent ones. Notably, India is home to the biggest gig economy in the world.  

To conclude, the past 4 years have seen a diversified increase in self-employment opportunities, well assisted by the Government of India. The allocation of different incentivized programs is helping to expand the self-employment base. This provides employment opportunities, improves the standard of living, increases the real wage rates, and reduces poverty. These outcomes are instrumental in achieving holistic, economic and social development. Henceforth the 6.34 crores aspiring Micro, Small and Medium Enterprises (MSMEs) have embarked on a new journey from employment to self-employment. And this will undoubtedly yield considerable and equitable growth in the years to come. India has a great demographic advantage at hand and providing self-employment opportunities is one large step towards accomplishing the greatest dividend.

– Vasudha Jha

Scope for further reading

Economic survey 2017-2018

Economic survey 2016-2017

National skill qualification framework, 18 March 2015- PIB

National skill development policy, 2009

NSSO  73rd  Round, 2015-2016

6th Economic census, 2013

 MicroSave Policy Brief #19 titled Pradhan Mantri Mudra Yojana: Behind the Numbers 

Labour Bureau’s Quarterly Report on employment scenario

Mudra Portal (

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