Jobless: India’s unemployment rate rises to nine-week high of 9.1%

India’s unemployment rate spiked to a nine-week high of 9.1% for the week ended August 16.

Compared with a week earlier, the employment rate and labour participating rate (LPR) also increased to 38.4% and 42.2% from 37.09% and 40.62%, respectively, the Centre for Monitoring Indian Economy (CMIE) said.

“There is a big increase in rural India in both employment and unemployment rates. This reflects increased agricultural activities,” CMIE’s managing director and CEO Mahesh Vyas said.

Buoyed by hectic sowing activity and jobs offered under rural employment guarantee scheme, MG-NREGS, the unemployment rate in rural India steadily plummeted to 6.34% for the week ended July 12 from 17.92% for the week ended May 31, but it again headed north to 7.10% for the week ended July 19 and further to 7.66% in the very next week; but fell to 6.47% in the week ended August 2.

However, since then the rural unemployment rate has been on the rise to stand at 8.37% for the week ended August 9 and further to 8.86% in the week ended August 16.

In urban India, the unemployment rate has been steadily decelerating from 25.14% for the week ended May 31 to 8.73% for the week ended August 2; but since then the graph is on the rise to 9.31% for the week ended August 9 and further to 9.61% for the week ended August 16.

XLRI professor and labour economist KR Shyam Sundar said both urban and rural employment rates are likely to rise in the next few months since the sowing of khariff crop is almost nearing its end and the provision of jobs under MGNREGS has also declined after picking in April, May and June; migrant workers are returning to their host states. Also, sudden micro lockdowns have affected the normal functioning of firms in the supply chain and also the small and medium enterprises. As a result, the demand for labour has declined.

After clocking 23.5% in April and May, the overall pan-India unemployment rate first dropped to 17.51% in the first week of June and then it took a steeper fall to 11.6% in the second week. It further came down to 7.4% in July, lower than the average unemployment rate of 7.6% during the entire 2019-20. For the week ended August 2, it stood at 7.19%; but since then it has been on the rise again to 8.67% for the week ended August 9 and further to 9.1% for the week ended August 16. Unemployment rate in February and March 2020 was 7.8% and 8.8%, respectively.

Overall, India’s employment was 37.6% in July. In June, the employment rate was 35.9%, 29.2% in May and 27.2% in April. In March, India’s employment rate was 38.2% and in January, it was 39.8%.

According to CMIE, the LPR for the week ended August 16 was 42.2% from 40.62% a week earlier. The LPR was at 40.7% in July compared with 42.7% for the whole of 2019-20. It fell to 40.5% in the last week of July 2020.