Unemployment report brings cheer for Modi in election month; joblessness falls in March

By: | Updated: April 16, 2019 1:13 PM

The latest data shows that unemployment fell in March. This might be good news for Modi government, for whom jobs would be the biggest issue in the election according to former RBI Governor Raghuram Rajan.

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In a respite to Narendra Modi government, which is under severe criticism for failing to create jobs amid the ongoing Lok Sabha election, the latest data shows that unemployment fell in March. This might be good news for Modi government, for whom jobs would be the biggest issue in the election according to former RBI Governor Raghuram Rajan.

The rate of unemployment in India fell to 6.7 per cent in March 2019, after having remained at over 7 per cent in three preceding months, Centre for Monitoring Indian Economy (CMIE), said in a recent report posted on its website. Earlier, the unemployment rate rose from 6.7 per cent in November 2018 to 7 per cent in December 2018. Later it rose to 7.1 per cent in January 2019 and then to 7.2 per cent in February 2019.

Previous CMIE reports and a leaked NSSO report showing rising unemployment in India had sparked a huge public debate in the country, with the opposition and critics of the government accusing it of failing to create jobs.

Former RBI Governor and former IMF Chief Economist Raghuram Rajan said to Bloomberg in a recent interview: “The biggest issue facing the Modi government on the economic front would be of jobs.”

But is all going really well?

Despite the seemingly good news of a fall in unemployment, CMIE report also adds a caveat — it has been primarily on the back of reduction in labour force, which fell from 42.7 per cent in February to 42.6 per cent in March 2019.

The labour force, which refers to the total number of persons able and willing to work, shrunk from 435 million in January 2019 to 431 million in February and then to 430 million in March, said CMIE managing director and CEO Mahesh Vyas in the report.

ALSO READ: Raghuram Rajan says this will be the key issue for Modi’s government as India goes to poll

While the labour force shrunk by a million, the number of employed increased by a million to 401 million in March 2019 from 400 million in February, said Mahesh Vyas.

Employment in rural India shot up to 275 million in March after having fallen to 271 million in February, said the report. However, it fell sharply in urban India in March 2019 to 127 million in March from 129 million in February 2019, the report added.

Meanwhile, Surjit Bhalla, veteran economist and former member of Prime Minister’s Economic Advisory Council, recently raised questions on the accuracy of the PLFS (Periodic Labour Force Survey) data. “All PLFS “facts” point to an under-counting of rural workers on the poorer side (and higher worker population). Hence, rural real wages increasing at an unprecedented rate; hence, employment is higher than that indicated,” he said in a twitter post.

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