India’s overall unemployment rate touches a nine-week high at 9.1%

India’s overall unemployment rate touched a nine-week high, in sync with economists’ assessment that the drop in joblessness was due to agricultural activities and, thus, temporary in nature.

The national unemployment rate climbed from 8.67% in the week to 9 August to 9.1% in the week ended 16 August, according to data from the Centre of Monitoring Indian Economy (CMIE).

The previous high was 11.6% in the week ended 14 June. In fact, it was even higher than the monthly joblessness rate of 7.43% witnessed in July, and the pre-covid monthly unemployment rate, shows CMIE data.

The rural unemployment rate climbed from 8.37% in the week ended 9 August to 8.86% in the week to 16 August. Rural unemployment rate was also at a nine-week high, since the 10.96% recorded in the week ended 14 June.

The lowest rural unemployment rate in recent months was recorded in the week ended 12 July when summer crop sowing was in full swing across Indian with the acreage far higher than last year.

Similarly, the urban unemployment rate was at 9.61% in the week ended 16 August, compared to 9.31% in the previous week. Urban unemployment crept up for the second consecutive week, and experts said it will continue to remain high in the short- to medium-term.

“A good crop season managed to taper down the unemployment post-reverse migration. But agriculture activities is seasonal and, this year, we saw a high absorption of people in that sector. Despite low productivity, it helped the employment scenario at least from the statistical point of view, but the current situation is different and the unemployment rate in the immediate to medium range will remain a tough task,” said Arup Mitra, a professor of economics at the Institute of Economic Growth.

“The gradual return of migrants to cities despite a spreading pandemic shows that rural India is in need of work. It will also create a demand-supply mismatch in urban areas as unemployment opportunities are not back to pre-covid-19 times.” Mitra said, adding that the labour force participation rate in August must be lower than the previous month as agriculture activities have dipped, people have started coming back to cities despite lack of jobs amid partial lockdowns across several states.

“Migrants who were earlier employed in construction or manufacturing may not be facing a big challenge as real estate construction has started picking up, but those who were in retail and hospitality sectors has a huge challenge at hand because demand is still low, people are not visiting markets and malls,” said K.R. Shyam Sundar, a labour expert and a professor of XLRI Jamshedpur.