Rural unemployment climbs to 6.9% in October
India’s rural unemployment rate climbed more than 100 basis points month-on-month (m-o-m) in October with the region seeing a significant fall in the creation of person-days under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), even as the rabi harvest season kicked off.
Rural unemployment climbed to 6.9% in October against 5.86% in September, according to monthly data from the Centre for Monitoring Indian Economy (CMIE), published on Monday .
The national unemployment rate in October, too, was up 6.98% compared to 6.67% in the previous month. However, urban unemployment was down from 8.45% in September to 7.15% in October, as economic activity, including industrial activity, picked up pace.
The weekly unemployment rate, which was also published on Monday, showed that both rural and urban, and national unemployment rates, have climbed in the week ended 1 November compared to the previous week.
The CMIE data showed that while national joblessness climbed to 7.15% in the week ended 1 November as against 6.86% in the week ended 25 October, rural unemployment jumped to 7.17% during the same period. This was more than the October monthly joblessness rate, which was below 7%. Weekly urban unemployment touched 7.1% in the week ended 1 November, as against 6.79% in the previous week.
“The harvest season has started and it will absorb some people in the labour market. However, the harvest season may not have picked up pace in several parts of the country and surplus labour may be contributing to this trend. Second, lack of decent jobs and skills mismatch between available work and surplus workers in the current environment in rural markets must be impacting the labour participation rate,” said Arup Mitra, a professor of economics at the Institute of Economic Growth, New Delhi.
“Along with continued stress in tourism, hospitality, and retail sectors, the low creation of person-days by the rural employment guarantee scheme must have been behind the fall. The initial spurt in rural job creation through MGNREGS seems to be subdued now,” said K.R. Shyam Sundar, a labour economist and professor at XLRI, Jamshedpur.
MGNREGS created around 265 million person days of work in September, while the October figure was 173 million, declining by more than 30% m-o-m, government data showed, reflecting the point of view of economists.
The official data showed that creation of person-days in October was higher than what was estimated.
India has been facing a massive jobs crisis and the situation has only exacerbated following the coronavirus outbreak, as businesses were hit hard and the overall economy plummeted since the nationwide lockdown was implemented in March.
“Things will gradually look better from now on as urban and industrial activities are picking up. Construction activities have also picked up, the information technology sector has done very well, the urban markets are opening up, and the festive season demand will contribute to the improving job scenario in urban India. However, decent jobs are still far away,” said Sundar.
“The recovery was smart in May and spectacular in June. It continued well into July. But it stalled in August and September…October shows signs of continued stress,” the CMIE said in a post on its website on 19 October