India's unemployment rate rises again as rural job market falters

Data by economic think tank CMIE shows that unemployment rate in the country increased to 8.4% in August from 7.4% in July as rural India faced the double whammy of a decline in MGNREGS employment along with a fall in employment related to Kharif sowing.

Business Desk, ETV Bharat: India’s unemployment rate has increased again in August after falling to pre-Covid levels in July, mainly led by a pullback in the rural jobs market that was so far leading the recovery, according to independent economic think tank Centre for Monitoring Indian Economy (CMIE)

CMIE data shows that the country’s unemployment rate, which has been falling so far after April, rose to 8.4% in August from 7.4% in July.

Source: CMIE

“This deterioration in labour market conditions in August was essentially located in rural India. While the unemployment rate rose in both regions (urban and rural), it rose more in rural India,” said CMIE’s managing director Mahesh Vyas.

CMIE data shows that employment declined by 3.6 million in rural India in August, thereby raising the count of the unemployed there to 2.8 million.

“The rest of those who lost jobs simply quit the labour market. And so, the labour force shrunk by 0.8 million in rural India. This shrinking of the labour force in rural India along with a sharp fall in employment is a sign of growing stress in the hinterlands,” Vyas added.

CMIE pointed that its findings sync with the employment trends seen in the government’s Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).

In June and July this year, the person-days of employment created under the MGNREGS scheme were twice the levels in the same months of 2019. But, in August, the growth in MGNREGS person-days of employment stood at a mere 14% year-on-year.

The fall in MGNREGS employment also coincides with a fall in farming activities in August. By July-end, 83% of the kharif sowing was complete. Less than 20% of the sowing was done in August. “Therefore, August could have absorbed a much lower quantum of labour compared to June and July,” pointed Vyas.

“The return of the migrants to urban labour markets reported by the media is possibly a reflection of a decline in rural jobs as much as a possible lure of some better jobs in urban India,” Vyas concluded.