India’s unemployment rate falls to 7.46%

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.

The country’s overall unemployment rate fell to 7.46% for the week ended August 23 from the nine-week high of 9.1% recorded in the previous week, driven by a fall in the rate in rural India.

The urban unemployment rate, however, rose to its highest in six weeks to 9.89%. According to the Centre for Monitoring Indian Economy (CMIE), the rural unemployment rate fell to 6.32% for the week ended August 23 from 8.86% recorded a week earlier.

Buoyed by a hectic sowing activity and jobs offered under the rural employment guarantee scheme, MGNREGS, 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 had a topsy-turvy journey since then – rising to 7.66% for the week ended July 26 and then falling to 6.47% in the next week and further moving up to 8.86% for the week ended August 16.

“Many of the returned migrants have either on their own or due to desperate calls made by labour supply contractors have started returning to the urban areas to reclaim their jobs or search for jobs as production activities have increased considerably and the urban informal sector, including the trading sector, is gradually returning to normalcy. Hence, the pressure on the rural labour market is easing though the unemployment rate will see considerable reduction when khariff harvesting will take place around October. The decline in unemployment is partially due to a decline in Covid threat probability,” XLRI professor and labour economist KR Shyam Sundar said.

In urban India, the unemployment rate had 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%, 9.61% and 9.89%, respectively in the subsequent weeks.

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 had 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. The unemployment rate in February and March was 7.8% and 8.8%, respectively.