Unemployment Rate Declines Sharply as India Exits Lockdown

The unemployment rate in India has declined to 11.6 percent in the second week of June as against 17.5 percent the previous week, data from the Centre for Monitoring Indian Economy (CMIE) revealed.

This indicates a shift towards levels before the COVID-19 outbreak and consequent lockdown, which began on March 25. In April and May, the unemployment rate was 23.52 percent and 23.48 percent, respectively.

The unemployment rate in February was 7.76 percent and climbed to 8.75 percent in March.

“The fall in the unemployment rate is doubly appealing as it is accompanied by an increase in the labour participation rate,” CMIE said.

During the week that ended on June 14, the labour participation rate (LPR) was 40.4 percent, nearing the pre-lockdown level of 42.7 percent.

The CMIE said employment rate, which had fallen 10 percentage points immediately after the lockdown was enforced, has been increasing since the second week of May.

“The employment rate shot up 3.3 percentage points from 32.4 percent in the week ended June 7 to 35.7 per cent in the week ended June 14. This is the largest weekly increase in the employment rate. It is, however, not as sharp as the 9.2 percentage points fall was in the week of March 29,” CMIE said.

Employment rate plunged to 29.9 percent in the week ended March 29 and hit a low of 26.1 percent in the week ended April 19.

“Much of the labour participation that was lost during the lockdown has been regained but, the gain in employment has been lesser. This is because the unemployment rate is still too high,” CMIE said.

Recovery of labour markets in rural India has been higher than the levels seen in urban areas, CMIE added.

The gradual easing of the lockdown began on June 1, as the government attempts to reopen the economy in a phased manner.

Source: Money Control