India’s unemployment rate is among the lowest in the world, Labour Minister Mansukh Mandaviya said on Monday, adding that the measures being taken would help stimulate job creation.

“When compared to its peers, India stands much better today, thanks to a series of government steps taken over the years,” he told FE in an interview.

Employment generation in a country rises only when manufacturing and services activities grow, along with continuous technological advancement, Mandaviya said. “In the past 10 years, the government has taken many policy decisions to support these sectors,” he said.

In 2023-24, India’s unemployment rate (UR) stood at 3.2%, which is similar to the figure recorded in 2022-23, according to the Periodic Labour Force Survey (PLFS). For perspective, according to the IMF, in 2024, the unemployment rate in the US stands at 4%, the UK at 4.2%, Russia at 3.1%, and Indonesia at 5.2%, and Brazil at 8%.

In 2017-18, UR in India stood at 6%, which decreased by 2.8 percentage points in seven years, the minister said. During this period the labour force participation (LFPR) rate jumped from 49.8% from 60.1%.

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Further, Mandaviya said that the government is making more efforts to increase employment and address the issue of employability. “We’ve introduced the Employment Linked Incentive Scheme (ELIs) in the Budget, which are going to be implemented soon,” he said.

An analysis by the Observer Research Foundation (ORF) shows that between 2016-17 and 2022-23, employment grew by almost 36% or 170 million in absolute numbers, while GDP grew at a rate of over 6.5%, on average.

Employment elasticity, which provides the percentage increase in employment for a percentage increase in value-added, is a rational measure for checking the relation between growth and employment generation in an economy. ORF estimates, based on a linear econometric model, show that for the period 2017-23, there was a 1.11 percent increase in jobs for a percent increase in value added. However, during 2011-16, the employment elasticity was only 0.01.

The Budget for FY25, presented in July, introduced three ELI schemes with an aim to provide employment opportunities to around 30 million individuals over a period of five years. The Budget pegged the total outlay for the scheme at Rs 1.07 trillion.