NEW DELHI: India’s unemployment rate in urban areas fell sharply to 6.6% in FY24 from 7.2% in the previous year, helped by the smart growth in the economy.
India’s economy is estimated to have grown at 7.6% last fiscal, as per the National Statistical Office’s (NSO) second advance estimates, up from 7% in FY23.
Data from the Periodic Labour Force Survey (PLFS) released on Wednesday showed that the urban unemployment rate fell to 6.7% in Q4FY24 from 6.8% in Q4FY23, although it rose sequentially from 6.5% in the December 2023 quarter.
“The reduction in urban unemployment is absolutely consistent with the GDP growth. India’s GDP has grown above 8% in the first three quarters of FY24,” said NR Bhanumurthy, vice-chancellor of Bengaluru’s BASE University. “There is a significant impact of the production-linked incentive (PLI) scheme as well,” he added.
The labour force participation rate (LFPR) improved to 39.5% in Q4 from 38.1% in the year-ago quarter, while the worker population ratio (WPR) went up to 36.9% from 35.6%.
Economists attributed the sequential rise in unemployment to the rural workforce migrating to urban areas for job opportunities during the non-harvest season. “The lean season in agriculture exacerbated the rural-urban migration process and that led to higher levels in urban unemployment,” said Lekha Chakraborty, professor, National Institute of Public Finance and Policy. “As December-June is ‘in between harvest’ season in India, workers go to the cities looking for jobs,” she said.
Typically, unemployment in urban areas rises in Q4 from Q3 in any financial year.
Finance minister Nirmala Sitharaman’s Office said on X: “The quarterly bulletin (January- March 2024) of Periodic Labour Force Survey released today shows a consistent increase in labour force participation rate (LFPR) and worker population ratio (WPR) and decreasing unemployment rates (UR) in urban areas.” The comparison was made on a year-on-year basis.
The FM’s office highlighted that the female unemployment rate decreased from 9.2% in Q4FY23 to 8.4% in Q4FY24. In Q3FY24, the female unemployment was 8.6%.
“The increased access to basic amenities such as piped drinking water under the Jal Jeevan Mission, clean cooking fuel under Ujjwala (no collecting or burning firewood), sanitation, etc, is freeing up women’s time from domestic duties, enabling them to undertake work and employment opportunities,” the FM’s office said.
The WPR, which shows the percentage of workers in the population, rose to 36.9% in Q4FY24 from 36.7% in Q3FY24, possibly due to rural workers migrating to urban areas. The WPR in Q4FY24 is at the highest since the start of the survey in 2018.
The labour force participation rate (LFPR) – the part of the population which supplies or offers to supply labour for pursuing economic activities – rose slightly to 39.5% in Q4FY24, up from 39.2% in Q3FY24. The LFPR comprises both employed and unemployed persons.
The unemployment rate, as per the PLFS, is defined as the percentage of unemployed persons in the labour force. The estimates of unemployment are as per the current weekly status (CWS) approach. According to the CWS approach, a person is considered unemployed in a week if he/she did not work even for 1 hour on any day during the reference week but sought or was available for work at least for 1 hour on any day during the reference week.
The statistics ministry surveyed 169,459 persons and 44,598 households for the PLFS survey of Q4 FY24. For Q3FY24 PLFS, 169,209 persons and 44,544 households were surveyed.
Source: The Financial Express
