The unemployment rate has moved into double-digits. This is not normal for India. The only time the unemployment rate lurched into double-digits was when India was shut down by a stringent nationwide lockdown during April and May 2020, the Centre for Monitoring Indian Economy said. The unemployment rate stood at 7.97% in April while the fall in employment in April was 7.35 million.
“There is no similarly draconian lockdown now although there are several local restrictions that restrain mobility in varying but distinctly milder degrees. The double-digit unemployment rate seen in recent times indicates that even these restrictions are taking a toll on the economy,” it added.
As per CMIE, the high degree of unemployment rate in May could be on the back of a higher number of job losses in the month as the labour participation rate has remained unchanged.
“The steady and substantial rise in the unemployment rate in May 2021 is likely to be the result of loss of employment during the month, i.e. some people who had employment already are losing it. We say this because there is no increase in the labour participation rate that could have also caused an increase in the unemployment rate,” it said.
CMIE data shows the unemployment rate was higher at 14.7% for the week ended May 23 compared to 14.5% in the week ended May 16, 2021, and 8.7% in the week ended May 9.
CMIE further said the 100 basis point fall in employment rate from 36.8% in April to 35.8% on May 23 would translate into a fall in employment of the order of 10 million. “This would be much more than the 7.35 million fall in employment recorded in April 2021,” it said, adding employment has been falling since January 2021.
“The unemployment rate has been rising in both, rural and urban regions. Usually, the urban unemployment rate is much higher than the rate in rural India. Urban unemployment entered the double-digit zone on May 6 when its 30-day moving average rate was 10.2 per cent. It has risen steadily since then. By May 20 it touched 12 per cent and as of May 23 it was 12.7 per cent. Urban unemployment rate, therefore, would most likely be in double digits in the month of May 2020,” CMIE said in its report.
