India’s unemployment rate fell to 7.6% in March, after rising to a six-month high of 8.1% in February, according to the Centre for Monitoring Indian Economy (CMIE). Rural joblessness rate fell by over 1 percentage point to 7.29% in March, even as the urban rate rose to a three-month high of 8.28%.
The unemployment rate stood at 6.57% in January.
Higher jobs creation under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MG-NREGS) could have played a role in the decline in rural joblessness rate in March, experts said. In February, 264 million person days of work was generated under the scheme, which was more than 23 million person days of work generated in January.
Labour expert and XLRI professor KR Shyam Sundar said the rise in urban unemployment could be attributed to reductions in production in sectors which depend on spare parts from China. Fresh lockdowns in China due to a new wave of the pandemic will play a crucial role in Indian labour market.
The recent peak of unemployment rate in India was 11.84% reported in May 2021, when the second wave of the pandemic was wreaking havoc. During the month, the unemployment rate in both urban and rural areas were in double-digits at 14.72% and 10.55%, respectively.
Though urban unemployment rate in urban areas continued to be in double digit in June; joblessness rate in both urban and rural areas remained in single digit each month since then, signalling improvement in economic activity.
“A consistent decline in urban unemployment rate will have to be achieved during the next quarter in order to not only ease the employment situation in urban labour market but also in rural areas. And for this, the pandemic-induced lockdowns should gradually but surely removed,” said Sundar.