According to the data released by the Centre for Monitoring Indian Economy (CMIE), the unemployment rate in India has risen to 6.98% in October 2020. The current urban unemployment rate stands at 7.13% whereas the rural unemployment rate stands at 6.90%. October’s unemployment rate has observed a rise as compared to September 2020 when the rate had declined to 6.67%, the lowest unemployment rate India had witnessed in the past 18 months.
However, the CIME observed that there was an odd case of the labour participation rate (LPR) declining in September, which was a sign of worry for the economy. The latest labour participation rate observed in September at 40.7% was 199 basis points lower than the average labour participation rate of 42.7% in 2019-20.
“This is odd because if the employment rate goes up and the unemployment rate goes down, it creates room for an expansion of the labour force and therefore also the labour participation rate,” CMIE CEO Mahesh Vyas has observed.
The LPR determines that what percentage of the population eligible to work are willing to be employed.
“If this proportion keeps falling as it evidently is, it does not bode well for India’s growth story. It renders all stories of a revival in the economy as a myth” Vyas observed.