One in every four in rural India unemployed, urban joblessness at 1-month low

  • Rural unemployment rate has been growing for the last couple of weeks despite rural economy opening up gradually
  • Economists believe despite the opening up of the economy, it will take time for unemployment situation to come back to the pre-covid time

Prashant K. Nanda
First Published25 May 2020
Rural unemployment rate of 25.09% is one of the highest since India went to a lockdown in end March
Rural unemployment rate of 25.09% is one of the highest since India went to a lockdown in end March

NEW DELHI: India’s rural unemployment rate climbed to 25.09% in the week ended 24 May from 22.79% in the previous week, while urban unemployment rate declined by over four percentage points during this period, data from the Centre for Monitoring of Indian Economy (CMIE) showed Monday.

Rural unemployment rate has been growing for the last couple of weeks despite rural economy opening up gradually. The 25.09% job loss rate means one out of every four workers in rural India is unemployed, and the situation may worsen as millions travel back to villages.

Indian Railways has said since May 1, it has transported 3.5 million migrants through its Shramik Special trains and the national carrier is set to transport 3.6 million more in the next 8-10 days. With more migrants walking back home or taking interstate bus services there would be an overall labour surplus in rural India.

According to CMIE data, rural unemployment rate of 25.09% is one of the highest since India went to a lockdown in end March. On two occasions -– in week ended April 19 and week ended May 3 -- rural job loss rate was more than 26%.

This gradual increase in job loss rate over the past two weeks comes even as government has relaxed rules allowing economic activity in parts. But labour economists believe that despite the opening of the economy, it will take time for unemployment situation to come back to a pre-covid time. There would be a see-saw between urban and rural unemployment rate over the next few months due to various factors including demand, over supply and re-start of factories, they said.

“Rural economy has not picked up, and consumption revival will take time. And here we are seeing a huge flow of workforce in the rural labour market making the unemployment scenario a big headache for all,” said K.R. Shyamsundar.

The positive news is, urban unemployment rate fell to 22.72% in the week ended 24 May from 26.95% in the week ended 17 May. This is the lowest job loss rate in a month and could be the outcome of a combination of factors -– opening of shopping markets, standalone stores and factories in industrial belts with limited capacity. This, besides the factor that demand for work must have shrunk due to reverse migration.

As per CMIE data, the overall unemployment in India inched up to 24.34% in the week ended 24 May from 24.01% in the week ended 17 May.

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