Unemployment in India

The Ministry of Labour rebutted a recent report by Citigroup which forecast that India will struggle to create sufficient employment opportunities even with a 7 per cent growth rate. The Ministry stated that official data sources like PLFS, RBI, etc. show consistent improvements in the key labour market indicators, including increased LFPR and WPR, and a declining Unemployment Rate during last five years.

State of ‘unemployment’ in India

• India Employment Report 2024 (created jointly by the Institute for Human Development and the International Labour Organisation)
  • India's working population increased from 61 percent in 2011 to 64 percent in 2021, and it is projected to reach 65 percent in 2036.
  • However, the percent of youth involved in economic activities declined to 37 percent in 2022. 
• Centre for Monitoring Indian Economy (CMIE):

• • The unemployment rate in India stood at 9.2 percent in June 2024, a sharp increase from 7 percent in May 2024.
  • Female unemployment reached 18.5 percent, exceeding the national average, in June 2024. This is up from 15.1 percent in the same period last year.
  • At the same time, male unemployment stood at 7.8 percent, slightly higher than 7.7 percent in June 2023.
  • The Labour Participation Rate (LPR) rose to 41.4 percent in June 2024 from 40.8 percent in May and up from 39.9 percent in June 2023, the rural unemployment rate rose to 9.3 percent in June from 6.3 percent in May.
  • The urban unemployment rate climbed from 8.6 percent to 8.9 percent.

• As per PLFS and RBI's KLEMS data, India has generated more than 8 crore (80 million) employment opportunities from 2017-18 to 2021-22. This translates to an average of over 2 crore (20 million) employment per year.
• The Annual Periodic Labour Force Survey (PLFS) report highlights positive trends in key labour market indicators over the past five years for individuals aged 15 years and above.
  • Labour Force Participation Rate (LFPR): The LFPR rose from 49.8% in 2017-18 to 57.9% in 2022-23.
  • Worker Population Ratio (WPR): The WPR increased from 46.8% in 2017-18 to 56% in 2022-23.
  • Unemployment Rate (UR): The Unemployment Rate decreased from 6% in 2017-18 to 3.2% in 2022-23.

How unemployment rate is calculated in India?

• The unemployment rate is expressed as a percentage and is influenced by economic conditions:
  • High Unemployment: Occurs during economic downturns when job opportunities are scarce.
  • Low Unemployment: Seen in periods of economic growth and prosperity when job availability increases.
• Formula for Calculating Unemployment Rate: The unemployment rate in India is calculated using the following formulas:
  • Unemployment Rate = Number of Unemployed Persons / Civilian Labor Force or
  • Unemployment Rate = Number of Unemployed Persons / (Number of Employed Persons + Number of Unemployed Persons)
• Criteria for Classification as Unemployed: To be considered unemployed in India, individuals must meet specific criteria:
  • Age: Must be at least 16 years old.
  • Availability: Available to work full-time during the last four weeks.
  • Actively Seeking Employment: Actively searching for job opportunities during this period.
  • Exceptions: Temporarily laid-off individuals actively seeking to return to their previous jobs are also classified as unemployed.