January unemployment rate falls sharply to 6.57%, lowest level since March 2021

Following a significant decrease in rural unemployment, India’s jobless rate dropped sharply in January to 6.57 percent, the lowest since March 2021. The unemployment rate increased significantly in December, rising to 7.91 percent from 6.97 percent in November.

This might be attributed to the easing of Covid restrictions that began on January 15, when the number of cases began to reduce throughout major states.

Rural unemployment in January was 5.84 percent, down from 7.28 percent in December 2021, according to statistics from the Centre for Monitoring Indian Economy (CMIE), while urban unemployment was 8.16 percent, down from 9.30 percent in December.

Telangana had the lowest unemployment rate in the country in January, at 0.7 percent, followed by Gujarat (1.2 percent), Meghalaya (1.5 percent), Odisha (1.8 percent), and Karnataka (2.9 percent).

This is expected to significantly cut India’s unemployment rate. According to CMIE, the number of unemployed people in India in December 2021 would be 53 million, with women accounting for the vast majority of them.

According to the CMIE, 35 million of these people were unemployed and actively seeking work, whereas 17 million wanted to work but were not actively looking.

Data show that, as unemployment has risen and labour force participation has fallen in recent years, job opportunities for India’s youth have worsened substantially. According to NSSO surveys, India’s unemployment rate in 2017-18 was the highest in more than four decades in 2019.

In May 2021, the CEDA-CMIE Bulletin investigated long-term sector employment in India. Using CMIE’s time-series data on sector-specific employment (Figure 1), we revealed that employment in India’s manufacturing industry had nearly halved between 2016-17 and 2020-21.

We observed that the pandemic disproportionately afflicted children in 2020-21. Net payroll gains for individuals under the age of 18 declined by 19%, while those between the ages of 18 and 21 fell by 15.6%.

According to CMIE MD and CEO Mahesh Vyas, an equally important goal is to hire the additional 17 million unemployed individuals who would be willing to work if chances emerged, even if they are not actively looking for employment.