Covid-induced lockdowns and restrictions on mobility have pushed India’s unemployment rate to a four-month high of 7.97% in April compared with 6.5% in March, 6.89% in February and 6.52% in January this year, data compiled by Centre for Monitoring Indian Economy (CMIE) showed.
The spike in the unemployment rate was seen both in urban and rural areas. While the unemployment rate in urban areas was at 9.78%, the highest in eight months, in rural areas, it was 7.13%, a four-month high.
CMIE’s MD and CEO Mahesh Vyas attributed the rise in the unemployment rate to the lack of growth in jobs. Vyas said the lack of growth in jobs has led to a double whammy of falling labour participation rate (LPR) and rising unemployment rate in April 2021.
In March 2021, the LPR was 40.2%, down from the range of 40.5-40.6% witnessed during December, January and February. In an article, Vyas had earlier said the fall in LPR was quite steep in March and seemed to stabilise at that level and not recover in April.
As of March 2021, there were 43.8 million people in India who were unemployed and were willing to work, Vyas wrote.
As a result of the nationwide lockdown imposed last year to rein in the rising number of coronavirus cases, India’s monthly unemployment rate reached its peak of 23.52% in April last year. It came down a little to 21.73% in May 2020 and 10.18% in June 2020 and to its lowest in November last year at 6.5%, before inching up again to 9.06% in December last year.
XLRI professor KR Shyam Sundar said, “The high monthly unemployment rate reported by CMIE is a real cause for worry for two reasons – a) it may not be capturing the real magnitude of unemployment given the increasing levels of reverse migration, and b) this portends probable intensification of the unemployment in the months to come given the disturbing dynamics of Covid-2 and the consequent progressively increasing newer lockdowns by state after state.”