Causes of unemployment are as follows :
(i) Increase in population : Population in India is increasing at an average rate of 1.9% per annum. It is creating an army of unemployed persons every year. Due to this reason, the back log of unemployment is continuously increasing.
(ii) Slow rate of economic growth: India being an underdeveloped country, could not grow more than 4% to 5% per annum during planning, period. It could not absorb the growing labour force in industries, agriculture and services.
(iii) Low rate of capital formation : The main reason for unemployment in India is the deficiency of capital. Rate of capital formation is not matching with increasing rate of labour force. It is mainly due to low rates of saving and investment.
(iv) Backwardness of Indian agriculture : Agriculture occupies a dominant place in our economy. Being backward, it cannot provide employment to the farmers throughout the year. It has created seasonal unemployment in the country.