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India’s unemployment rate rose to a six-month high of 8.1% in February, after it ebbed to a 10-month low of 6.57% in January, mainly due to a 251 basis points (bps) rise in the rural joblessness rate to 8.35%, the highest level in eight months. The urban unemployment rate, however, declined to a four-month low of 7.55% in February, the Centre for Monitoring Indian Economy (CMIE) data showed.
At 8.32%, overall unemployment rate was higher in August than in January. Just ahead of the pandemic, the country’s overall unemployment rate was 7.76% in February 2020. The rate was lower at 6.89% in February 2021.
In recent times, the overall unemployment rate was the highest (11.84%) in May 2021. During the month in which the pandemic was wreaking havoc, the unemployment rate in both urban and rural areas were in double-digits at 14.72% and 10.55%, respectively.
Labour sector experts say that the softening of the urban unemployment rate from 8.2% in November, 9.3% in December, 8.16% in January and 7.55% in February is primarily due to rapid liberalisation of lockdown conditions, speedy revival of formal and more importantly, informal sector in the urban areas.
“On the other hand, with a deficit in the MNREGA budget in several states and possibly limited employment generation in the non-farm sector in the rural areas, the unemployment rates are climbing up to the levels seen eight months ago. The spike in the rural unemployment reflects the volatility in the labour market,” said labour economist and XLRI professor KR Shyam Sundar.
Sundar said labour market in the rural areas need to stabilise at lower rates of unemployment which demands immediate proactive intervention by the government.
Rachit Mathur, founder & CEO, Avenue Growth, an on-demand work platform, said the company has been witnessing a steady rise in demand from its clients for workers for deployment in semi urban and rural areas. “Growth and work opportunities in rural and semi-urban areas is just going to grow now,” he said.
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