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in)
While the unemployment rate in the state averaged 46% during April and May 2020,
the peak months of the lockdown, the all-India unemployment rate in the same period
was 24%. Though the unemployment rate in the state has since then come down to
12%, it is much higher than the all-India estimate of 6.7% at the same time.”

“CMIE (Centre for Monitoring Indian Economy) : May 2020

Table of Contents
1. Unemployment…?
2. Measurement of Unemployment in India
3. Types of Unemployment in India
4. Unemployment Trap and Harmonized Unemployment
5. Measurement of Unemployment in India
6. Alarming situation in India..?
7. Unemployment Status in BIHAR
8. Causes of Unemployment in BIHAR
9. Impact of Unemployment in Bihar
10. Way Forward
11. Schemes of Govt. of Bihar to enable the better
Employability in Bihar

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Unemployment…?
Unemployment occurs when a person who is actively searching for employment is unable
to find work. The U.S. Bureau of Labor Statistics (BLS) has a more specific definition:-
‘‘People who don’t have a job, have actively looked for work in the past four weeks, and
currently are available for work.’ The BLS also includes people who are temporarily laid
off and are waiting to be called back to that job in unemployment statistics.

Unemployment is often used as a measure of the health of the economy. The most
frequent measure of unemployment is the unemployment rate, which is the number of
unemployed people divided by the number of people in the labor force.
Unemployment rate = (Unemployed Workers / Total labor force) × 100

National Sample Survey Organization (NSSO) defines Employment and Unemployment


on the following activity statuses of an individual:
Working (engaged in an economic activity) i.e. 'Employed'.
Seeking or available for work i.e. 'Unemployed'.
Neither seeking nor available for work.
The first two constitutes labor force and unemployment rate is the percent of the labor
force that is without work.

Measurement of Unemployment in India


National Sample Survey Organization (NSSO) defines employment and
unemployment on the following activity statuses of an individual. NSSO, an organization
under MoSPI – Ministry of Statistics and Programme Implementation measures India’s
unemployment on three approaches:

1. Daily Status Approach: Unemployment status of a person under this approach is


measured for each day in a reference week. A person having no gainful work even
for one hour in a day is described as unemployed for that day.
2. Weekly Status Approach: This approach highlights the record of those persons
who did not have gainful work or were unemployed even for an hour on any day
of the week preceding the date of the survey.
3. Usual Status Approach: This gives the estimates of those persons who were
unemployed or had no gainful work for a major time during the 365 days

Types of Unemployment in India


In India, there are seven types of unemployment. The types of unemployment are
discussed below:

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1. Disguised Unemployment- This is a type of unemployment where people
employed are more than actually needed. Disguised unemployment is generally
traced in unorganised sectors or the agricultural sectors.
2. Structural Unemployment- Structural unemployment is one of the main types of
unemployment within an economic system. It focuses on the structural problems
within an economy and inefficiencies in labor markets. Structural unemployment
occurs when a labor market is not able to provide jobs for everyone who is seeking
employment. There is a mismatch between the skills of the unemployed workers
and the skills needed for the jobs that are available. It is often impacted by
persistent cyclical unemployment. For example, when an economy experiences
long-term unemployment individuals become frustrated and their skills become
obsolete. As a result, when the economy recovers they may not fit the
requirements of new jobs due to their inactivity.
3. Seasonal Unemployment- That
situation of unemployment when
people do not have work during certain
seasons of the year such as labourers in
India rarely have occupation
throughout the year.
4. Vulnerable Unemployment- People are
deemed unemployed under this
unemployment. People are employed
but informally i.e. without proper job
contracts and thus records of their work are never maintained. It is one of the main
types of unemployment in India.
5. Technological Unemployment- The situation when people lose their jobs due to
advancement in technologies. In 2016, the data of the World Bank predicted that
the proportion of jobs threatened by automation in India is 69% year-on-year.
6. Cyclical Unemployment- Cyclical unemployment is a type of unemployment that
occurs when there is not enough aggregate demand in the economy to provide jobs
for everyone who wants to work. In an economy, demand for most goods falls,
less production is needed, and less workers are needed. With cyclical
unemployment the number of unemployed workers is greater that the number of
job vacancies.
7. Frictional Unemployment- Frictional unemployment is another type of
unemployment within an economy. It is the time period between jobs when a
worker is searching for or transitioning from one job to another. Frictional
unemployment is always present to some degree in an economy. It occurs when
there is a mismatch between the workers and jobs. The mismatch can be related to
skills, payment, work time, location, seasonal industries, attitude, taste, and other
factors. Frictional unemployment is influenced by voluntary decisions to work

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based on each individual’s valuation of their own work and how that compares to
current wage rates as well as the time and effort required to find a job.

Unemployment Trap and Harmonized Unemployment


This is a situation when a person gets used to not working. The benefits of being
unemployed get heavier and the individuals feel demotivated to work again. This is a
common case when the income is low and the efforts needed to work are high.
Harmonized unemployment rates refer to unemployed individuals in their working age
who are looking to find work. This estimate of the unemployment rate is more relevant
internationally as it calculates the % of the labor force seasonally.

Measurement of Unemployment in India


The Ministry of Statistics and Programme Implementation monitors the National Sample
Survey Office. They follow certain approaches to measure unemployment in India. They
are –
1. Usual Status Approach – This approach only considers individuals unemployed who
have been majorly not working during the 365 days before the survey date.
2. Weekly Status Approach – This approach considers individuals unemployed if they
have not been working for hours or a day before the survey date.
3. Daily Status Approach – This approach considers an individual unemployed even if
he did not work for an hour on a particular day.

Alarming situation in India..?


India Unemployment Rate increased to 7.11 % in Dec 2020, from the previously
reported number of 5.27 % in Dec 2019. India Unemployment Rate is updated yearly,
available from Dec 1991 to
Dec 2020, with an average
rate of 5.65 %. The data
reached an all-time high of
7.11 % in Dec 2020 and a
record low of 5.27 % in Dec
2019. The data is reported by
reported by World Bank. In the
latest reports, India
Population reached 1,355.00
million people in Mar 2021.
The country's Labor Force
Participation Rate dropped to
46.29 % in Dec 2020. The lockdown to contain the CORONA VIRUS outbreak has forced
many industries to shut down thus increasing unemployment across the country .

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Unemployment Status in BIHAR

(1) The employment rate in Bihar was 33.8 per cent in September 2020, which means
that only one in three adult Biharis is employed.

(2) Data from the National Sample Survey showed that Bihar’s unemployment rate rose
in 2018-19 to 10.2 per cent, as against 7.2 per cent in the year-ago period. At the same
time, the overall unemployment rate for the entire country fell to 5.8 per cent from 6.1
per cent the year before.

But more worryingly, the data showed that Bihar had one of the highest
unemployment rates in the age-group of 15-29 years — 30.9 per cent in 2018-19, as
against 22.8 per cent in the year-ago period. This data point could have worsened in
subsequent years.

Unemployment Remains High In Bihar


35
30.9
30

25 22.8

20 Overall Unemployment

15
10.2 Unemployment in age group of 15-
10 7.2 29

0
2018-19 2017-18

(3). After the lockdown brought high-scale economic disturbances during April and May
2020, the unemployment rate in Bihar shot up to 46 per cent, while the all-India
unemployment rate in the same period was 24 per cent, according to the Centre for
Monitoring Indian Economy (CMIE). With a gradual easing in restrictions, the
unemployment rate in Bihar dropped to 12 per cent, but, even this is much higher than the
all-India estimate of 6.7 per cent at the same time.

(4) Bihar’s unemployment rate is higher than the all-India average. According to the
2018-19 Periodic Labor Force Survey (PLFS), the official source of employment

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statistics in India, the unemployment rate in Bihar was 10.2% in India, way above the all-
India average of 5.8%. A comparison with previous Employment Unemployment
Surveys (EUS), the predecessor of the PLFS, and the 2017-18 PLFS shows that
joblessness in Bihar has been worsening vis-a-vis the rest of India. In 2004-05, Bihar’s
unemployment rate was 0.8 times the all-India unemployment rate. This ratio has
increased over the years. It was 1.6 in 2011-12, 1.2 in 2017-18, and 1.8 in 2018-19.

(5) Only 10% of jobs in Bihar are salaried jobs. According to the 2018-19, PLFS, 23.8%
of India’s workers had a salaried job. This number was just 10.4% for Bihar. In 2011-12
people of Bihar with salaried job was 5.8 per cent, 13.1 per cent in 2017-18 and declined
to 10.4 per cent in 2018-19. In 2004-05, nationally 14.3 per cent people in the country
were salaried, 17.9 per cent in 2011-12, 22.8 per cent in 2017-18 and 23.8 per cent in
2018-19.

(6) The status of employment for women was also a concern. The worker population
ratio, which denotes how many people in a given population set are employed, was just
3.9% for rural women in Bihar against the national average of 24.6%. Put simply, this
meant that at all-India level, nearly every fourth rural woman was employed but in Bihar
only about 4 in every 100 rural women found a job.

(7) The worker population ratio (WPR) for male workers in rural Bihar was 64%, about
8 percentage points lower than the all-India average. The WPR for female workers was
abysmally low at 3.9% in rural Bihar. In 2017-18, 55.9% males were self-employed and
the share of casual labor at 32.1% was significantly higher than the all-India level
(24.3%).

(8) Fewer young people – yet fewer jobs. Although Bihar has one of the lowest
proportion of young people, unemployment for them (15- to-29 age group) is higher at
17.5% than the national average of 13%. The unemployment rate for those above 30 is
1.4%, according to labor data, the same as the national average.

(9)As in other parts of the country, educated and qualified youngsters are more
unemployed in Bihar than youth who are illiterate or with low education.

(10) Most of Bihar’s youth are engaged in agriculture, followed by construction and trade.

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In Bihar, the biggest employment generating industry for working males was agriculture,
forestry and fishing, accounting for nearly 45% of all employment. Construction and
manufacturing sectors together accounted for every fourth job for men. In the case of
women, while agriculture remained the top employer (nearly 54%), every fourth job was
found in the education sector. On an average, a factory in Bihar employs only 40
workers, which is almost half of the all-India average (76.7 workers) and one-third of a
factory’s employment-generating capacity in Haryana (120.7 workers).

Causes of Unemployment in BIHAR

(1) Less number of industries- To curb the chaos created by the Corona Virus crisis,
Indian states are formulating their strategies to open doors for various companies
and to attract foreign investments. But, Bihar has a low share of factories in the
country. The table provides a tally of number of factories as compared to allover
India.

2004-05 2017-18

250000
237684
200000

150000
136353
100000

50000

0 1675 3461
Bihar All India

Number of Factories
250000 2,37,684 2004-05
2017-18
200000

150000 1,36,353

100000

50000
1675 3461
0
Bihar All- India

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Again, this is fallout of the lower share of manufacturing in GSDP. Manufacturing
has the potential of attracting higher investment which in turn generates more
employment. The government hence needs to focus on providing the right
incentives to empower it, suggests a CARE Ratings report. Adding to it, the low
share of manufacturing also gets reflected in the low quan
quantum
tum of fixed capital in
the state which is just 0.6 per cent of total.

Present Chief MMinister of Bihar,, Nitish Kumar once said in a statement in


2018 that Bihar lacks big industries due to its geographical location. He said that
state is not able to set uup
p big industries as it was landlocked and stressed on the
need of encouraging small industries in such a situation. Associate Professor,
Chirashree Das Gupta at JNU, in her essay wrote that bifurcation of the state is
one of the reasons that industrializat
industrialization has slipped off from Bihar.

Fixed Capital (in crore)


3285889
3500000
3000000
2500000
2000000 Bihar
1500000 India
1000000 513069
500000 2968 19977
0
2004-05 2017-18

“Bifurcation led to not only a decline of industry in Bihar, it also


drastically altered the regional representation ooff different
industries. Currently, food, tobacco, leather and non non-metallic
metallic
mineral products make up the base of present industry in Bihar.
What has been lost is the industry based on coal, refined
petroleum products, basic metals, motor vehicles and trailers,
traile all
of which were salient feature of the industrial map of erstwhile
Bihar,” she writes
writes.
Echoing the same thought, Prof. Pavnesh Kumar says, “Exactly, because the mines for
raw material for industries like coal, zinc, iron etc are situated in Jharkhand. Moreover,
60 per cent of the GDP of Bihar comprises of service sector and only 23 per cent comes

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from industry. The major developed cities are now located in Jharkhand. So, demand of
industrial product is less in Bihar as compared to Jharkhand.” Besides geographical
reasons, there are many other factors such as poor infrastructural and policies, scanty
natural resources, and lack of skilled manpower which often explains lesser
industrialisation in the region. But, most of the heavy industry after bifurcation of the
state went to Jharkhand making agriculture overcrowded due to the dearth of employment
opportunities.

On the other hand, Bihar as a state is way behind among other regions including
Jharkhand, which bagged fifth position in ease of doing business ranking 2019. “Due to
corruption, lack of infrastructure, lack of administrative reforms, law and order problems,
and lack of political will has made setting of enterprises in Bihar a tough turf. Its rank is
26 out of 36 states and UTs (2019), and even the neighboring state Jharkhand is ahead of
us,” exclaims Prof. Kumar.

Suggesting the future course of action, Dr Singh proclaims, “Bihar lags in the
ranking for State Investment Potential Index (2018) and State Competitiveness Index
(2017), amongst other rankings of Indian states. To make the state more competitive and
investment friendly, the public investment in the transport sector in Bihar which has
almost tripled from FY13 to FY20, needs to be enhanced. Currently, it is far below the
national average in terms of length of national highways and railway tracks.”

(2)Poverty and low per capita income- Due to poverty, students lacks good and quality
education which further leads to unemployment. Due to unemployment poverty rises, so
it creates vicious cycle. In 2011-12, Bihar remained one of the poorest states in the
country, with 33.7 per cent of its population below the poverty line. Economists and
analysts say though there may have been some improvements in the subsequent years,
demonetisation and now the Covid-19 pandemic may have pushed more people below the
poverty line. Shaibal Gupta, founder member secretary of the Asian Development
Research Institute (ADRI) in Patna, said demonetisation was like a “monetary Covid”
that may have increased poverty levels in the state.

Care Ratings, in a 30 October report, estimated that the per capita GSDP of Bihar was
at Rs 46,664 in 2019-20, only 35 per cent of the national average of Rs 1,34,226. In
2011-12, its per capita GSDP was at 34 per cent of the national average, reflecting
negligible improvement, despite the fact that the state’s economy grew at a faster pace
than the overall Indian economy.

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Bihar's GSDP Growth Rate (in %)

15
12.3 13.6 14.8 15
10
8.2 8.4
5

0
2013-14 2014
2014-15 2015-16
2016-17
2017-18
2018-19

“Bihar remains one of the most populous states with the lowest per capita income. A lot
needs to be done to lift the economy to a higher level,” the report said.

(3) Rise of unemployment due to massively hit informal workforce


workforce- The lockdown
imposed after the outbreak of pandemic affected the informal workforce of Bihar
massively. This is approximately 94 per cent of the total workforce in Bihar. Also, a huge
influx of migrants
nts during the initial phase of lockdown added to the woes. This has led to
another major wave of unemployment in the state.

(4) Deterioration of rural economy due to pandemic


pandemic- Bihar has faced large-scale
large
disruption of economic activities as the production units were shut. This further led to the
extinction of small-scale
scale cottage industries. This implies a permanent loss of the
productive capacity of the Bihar economy, states Asian Development Research Institute
(ADRI), which worked extensively on the econo
economic
mic survey. According to the institution,
Bihar economy is likely
ely to contract by 15 to 18 per
percent in 2020.

“In the case of Bihar, the public investment accounts for a major part of
the total investment and this component will decrease substantially in
2020-21, as state finances will be much stressed due to the crisis. The
resulting negative overall growth rate of Bihar economy under
reasonable assumptions will be approximately between minus 15.0 to
18.2 per cent,” revealed the Asian Development Research Institute
(ADRI) report.

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(5) Inadequate state support, legal complexities and low infrastructural, financial and
Market linkages to small/ cottage industries or small businesses, making such enterprises
unviable with cost and compliance overruns.
(6) Huge workforce associated with informal sector due to lack of required
education/skills, which is not captured in any employment data. For ex: domestic helpers,
(7) Low productivity in agriculture sector combined with lack of alternative opportunities
for agricultural worker which makes transition from primary to secondary and tertiary
sectors difficult.
(8) Regressive social norms that deter women from taking/continuing employment.
(9) Low productivity of labor- The low productivity of labor also leads to a lower level of
compensation to the workers in Bihar. For instance, a worker in a factory in Bihar
received Rs 129,600 per annum as wages, salaries and bonus, a third of the prevailing
compensation level in neighboring Jharkhand (Rs 373,800) and Maharashtra (Rs
344,000), the two best performing states in India. At the national level, the average
compensation per annum was Rs. 252,800.

Impact of Unemployment in Bihar

(1) Migration to other states- when it comes to migration, Bihar tops the country with
the highest percentage of migration taking place every year. According to 2011
census, 32.3 per cent people in Bihar migrated to other parts of the country for job
and employment followed by Odisha at 31.5 per cent.
(2) The problem of unemployment gives rise to the problem of poverty in Bihar.
(3) Young people after a long time of unemployment indulge in illegal and wrong
activities for earning money. This also leads to increase in crime in the country.
(4) Unemployed persons can easily be enticed by antisocial elements. This makes
them lose faith in democratic values of the country.
(5) It is often seen that unemployed people end up getting addicted to drugs and
alcohol or attempts suicide, leading losses to the human resources of the country.
Way Forward
(1)Challenges and steps need to be taken in the revival of local economy
The state does not have major fund access due to lack of industries and is primarily
dependent on government funds. In such circumstances, responsibility for reviving
sectors rests majorly on the shoulder of state government. This has been further explained
in the ADRI report. It states that Bihar has been heavily dependent on central transfers
and grants for resources, which was 77.6 per cent in the year 2018-19. This significant
reduction in the revenue collection of the central government will affect the state finances
badly. Hence, Bihar needs to explore the possibility to generate more revenue from its
own sources. It was noted that growth of the state depends heavily on increasing fiscal
capacity of the state government. This indicates that the state government and sectors
have a bigger role in reviving the economy.

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On the other hand, the crisis gives an opportunity to revisit the functioning of lower-level
bureaucracy for efficient implementation of the government policies. First of all, the
government has to work on increasing purchasing power and have to provide
employment. Here, MGNREGA, a demand-based employment programme can be an
effective short-term relief measure for providing employment, especially for the rural and
unskilled workforce.

(2)Agriculture as a booster shot for economy


In Bihar, the biggest employment generating industry for working males was agriculture,
forestry and fishing, accounting for nearly 45% of all employment. Construction and
manufacturing sectors together accounted for every fourth job for men. In the case of
women, while agriculture remained the top employer (nearly 54%), every fourth job was
found in the education sector.

Bihar is a leading producer of vegetables, jute, and mesta. In addition to this, it is


also known for Shahi litchi from Muzaffarpur, Zardalu mango from Bhagalpur, and
Katarni rice. A table here shows how Bihar is progressing in contributing as an agrarian
economy over past few years.

The table also indicates there is a lot of scope of improvement, as the share in total output
is still lower when compared to the demographics. But, the fact that they have been
increasing yield per hectare bears testimony to efforts they have put in. It also shows the
natural advantage of fertile land of this region which are fed by rivers. Here is another
table indicating a comparison with the national average.

As per the analysis of CARE Ratings, productivity in Bihar is higher in coarse cereals,
pulses, and sugarcane compared with all India average which is very encouraging.
However, a lot of this has been achieved by very high use of fertilizers which is 70 per

cent more than the national average. In case of Bihar, it is 227.3 kg per hectare against
13 Bihar Naman Publishing House (www.biharnaman.in)
the national average of 133.1 kg per hectare in 2018 2018-19. Adding his views, Dr. Singh
claims that agriculture sector can be game changer for the upheaval of Bihar economy.
He claims, “We also believe that the agriculture reforms announced by the government
will help farmers to access markets, realise better price for their products, encourage
investments, and more importantly bring about standardization in quality for exports. The
agriculture
ture sector of Bihar is likely to receive a boost through this.”

(3) Measures boosting entities of manufacturing


The number of new projects announced has been on hike, which adds in the efforts to
make a progressive Bihar. This in turn had put in more inve investments
stments in the state.
According to the data, it was 3 per cent of total in the country compared with 1.5 per cent
15 years back. Hence, it can be said that focus on manufacturing and development of
more projects can lead to revival of the economy.

Medium and Small scale Industries in


Bihar
Number of Units (in Lakhs)

800 634
600
362
400
India
200 15 34
0
2006
2006-07 2015-16

Overalll Bihar stands at number 8th when it comes to medium and smallsmall-scale
scale industries.
Out of 5.4 per cent of the MSMEs, Bihar employs nearly 5 per cent of the total employed
under this classification. However, the share of total investments under this classification
classific
is low at 1.3 per cent which saw a decline of 1.8 per cent in 2006
2006-07.

Professor Kumar says that Bihar will be benefitted if the state focuses on
manufacturing and setting up more micro units. According to him, the MSME sector will
give some respite from the bigger issues related to unemployment. “As per the latest data
there are 8.23 lakhs MSME units in Bihar. Out of which 8.05 lakhs are micro enterprises,
0.17 lakhs is small, and 0.16 lakhs is medium enterprises. It means major chunk in
MSME sector is of micro-enterprises.
enterprises. This sector can hence become a growth engine of
Bihar,” he suggests.

14 Bihar Naman Publishing House (www.biharnaman.in)


Along with manufacturing, the progress in infrastructure indicators such as power,
roads and highways, railway tracks, and communication connections all show that there
is a lot of scope for further improvement. Export is another sector that can add value to
the economy. As Bihar is surrounded by land on all four sides, exports from the state
have accounted for only 0.53 per cent of all-India exports in 2019-20. This share has
marginally improved from 0.3 per cent in 2013-14, but there is still scope for
improvement, states CARE Ratings.

Overall, a lot needs to be done to revitalize the economy of Bihar as it is one of the most
populous states with lowest per capita income. Agriculture being one of its strength, the
increased production can contribute in the fair shares of GSDP. It is currently higher than
the national average. The state government also needs to improve rank in doing business
to generate investments.

(4) Manufacturing could be key for job creation

The Care Ratings report also pointed out that Bihar has a low share of India’s factories —
only 1.5 per cent as of 2017-18 — and will need to improve.

“This is a fallout of the lower share of manufacturing in GSDP, given that manufacturing
has the potential of attracting higher investment, which in turn generates more
employment… The government needs to focus on providing the right incentives to enable
the same,” the report said.

(5) Public investment in sectors like health, education, police and judiciary can
create many government jobs.

Schemes of Govt. of Bihar to enable the better Employabilty in Bihar.

The State Government has launched special schemes/ programs/ policies to enable the
youth of Bihar become self-reliant by improving their competency through creating
opportunities for education and skill development and better employability. These
schemes include -
1. Bihar Student Credit Card Scheme.
2. Mukhyamantri Nishchay Swayam Sahayata Bhatta Yojana.
3. Bihar Start Up Policy.
4. Kushal Yuva Program Skill Training Scheme.

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5. Provision of free internet facilities through Wi-Fi in all Government universities
and colleges in the state.
6. Mukhyamantri Yuva Udyami Yojana.
7. Mukhyamantri Mahila Udyami Yojana.
8. Saat Nischay Yojana Part 2.
9. Mukhyamantri Ati Pichda Varg Udyami Yojana (CM EBC Entrepreneurship
Scheme).
10. Mukhyamantri Anusuchit Jati Evam Anusuchit Janjati Udyami Yojana (CM
Scheduled Caste and Scheduled Tribes Entrepreneur Scheme).
11. Mukhyamantri Harit Krishi Sanyantra Yojana.
12. Bihar Berojgari Bhatta Yojana.
13. Bihar Skill Development Mission (BSDM).
14. Single Window Assistance.
15. Handloom Archaeological Schemes.
16. Implementation Of National Mission On Food Processing.
17. Aao Bihar Scheme.
18. Mukhyamantri Samekit Hastkargha Vikas Yojana.
19. CM Micro & Small Industries Cluster Development Scheme.
20. Chief Minister's Tasar Development Scheme.
21. Integrated Development Food Processing Sector Yojana.

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Unemployment Speaks in
BIHAR

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