Rural India surprises with job loss amid peak harvesting season in October; labour market stagnates

Jobs in rural India surprisingly plunged in the month of October, which is known for the peak month for the harvesting of Kharif crop. While sowing is spread over four months, most of the crop is harvested in October. It is also possible that employment under the MGNREGS has declined significantly in October, said the Centre for Monitoring Indian Economy (CMIE). Till October 19 this year, the scheme had provided 5.85 crore person-days of employment compared to 13.8 crore person-days of employment during the full month of October 2019. However, these numbers get revised very substantially and therefore it may be hazardous to draw inferences at this stage, CMIE added. Yet, the fall evident so far is quite large. 

The employment rate in rural India was 39.8 per cent in September, which was at the highest level since the lockdown began and was close to the pre-Covid level. However, rural India could not sustain an employment rate of 40 per cent or more. The weekly employment rate had touched 39.9 per cent in the week ended September 6 but it is on a downward trajectory since then. In the week ended October 4, the rate was down to 39 per cent and then it slipped further to 38.8 per cent in the week ended October 11, and recovered to 39.5 per cent in the week ended October 18. 

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The falling employment rate in rural India and the continued low employment rate in urban India are the weaknesses in India’s labour market recovery process. Also, the economic recovery is showing signs of stagnation after a decent recovery in the previous months. After the major shock in April 2020, the recovery was smart in May and better in June. It continued well into July as well however it stalled in August and September. Now, it appears that the stagnation could extend or worsen in October, CMIE underlined. 

Meanwhile, it is to be noted that since the denominator in the employment rate — working age population — keeps rising naturally, it is important to generate additional jobs to merely keep the employment rate unchanged. However, in the past four years, the employment rate has fallen steadily in each year as employment has been stagnant.