CMIE said though the urban unemployment has fallen sharply but, it is still distinctly higher than the pre-lockdown levels at 11.2% in the week ended June 12.
After reaching a peak to 27.1% in the first week of May due to the lockdown, unemployment rate in the country dropped sharply to pre-lockdown level at 8.5% in the third week of June, according to the Centre for Monitoring Indian Economy (CMIE).
“The unemployment rate fell to its pre-lockdown level of 8.5% in the week ended June 21. The rate had spiked from 8.75% in March to 23.5% in April and May. It had peaked at 27.1% in the week ended May 3. It began to fall thereafter – initially hesitatingly and then precipitously in June. The rate had fallen to 20% in the last week of May,” CMIE said.
The rate first dropped to 17.5% in the first week of June and then it fell further to 11.6% in the second week of the month and now, at the end of the third week of the month, it stood at 8.5%. This signals a rather smart revival of the economic activities, corroborated by certain other data points including exports, which touched $4.94 billion in the first week of June, against $5.03 billion a year before, industrial power consumption and highway toll collections.
CMIE said though the urban unemployment has fallen sharply but, it is still distinctly higher than the pre-lockdown levels at 11.2% in the week ended June 12. The urban unemployment spiked to an average of 25.83% during the peak unemployment period of April and May.
However, rural areas are seeing a big gain in employment apparently by massive sudden increase in Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) activities and also by a sharp increase in kharif sowing this year. CMIE said rural areas may see bigger gains in the months to come or at least sustain the current gains.
In its June 16 report, the CMIE highlighted that the fall in the unemployment rate came with an increase in the labour participation rate (LPR), which was recorded at 40.4% in the week ended June 14. In the week ended March 22 (just before the imposition of the national lockdown), the LPR stood at 42.6% but fell to 39.2% in the first week of the lockdown and again to 36.1% in the first week of April and was at 35.4% in the week ended April 26. Since then, the LPR has been on the recovery path.
Similarly, India’s employment rate, which fell by a massive 10 percentage points to 29.9% immediately after the lockdown imposition and declined further to 26.1% in the week ended April 19, started rising since early May.
The employment rate increased 3.3 percentage points from 32.4% in the week ended June 7 to 35.7% in the week ended June 14.