Rural pain pushes India's unemployment rate up to 7.7% in October: CMIE

The report said the decline in employment was mostly in rural India and mainly in non-agricultural rural India and the daily wage labourer segment was the most hit as it shrunk by nearly 15 million

A significant increase in the rural unemployment rate pushed the overall unemployment rate in India to 7.7 per cent last month, reversing the decline seen in September, reported The Economic Times. The unemployment rate had dropped to 6.43 per cent in September, the lowest in four years.

According to the data from the Centre for Monitoring Indian Economy, the rural unemployment rate was 8.04 per cent in October; it was 5.84 per cent in September. The data also showed that the urban unemployment fell in October to 7.21 per cent, a decline of nearly 0.5 percentage points when compared to September.

The ET report said the rise in the unemployment rate in October was accompanied by a small drop in the labour participation rate (LPR) -- from 39.3 per cent in September to 39 per cent in October.

A falling LPR, when accompanied by an increasing unemployment rate, effectively means that the employment rate has been falling, according to CMIE.

"The persistent fall in the LPR is a matter of grave concern because it suggests that an increasingly smaller proportion of the working age population is willing to be employed," CMIE said in the report.

It said the total number of employed fell down by 7.8 million from 404.2 million in September to 396.4 million in October this year. Further, the number of the unemployed rose by 5.6 million and about 2.2 million quit the labour markets, resulting in India's labour force shrinking from 432 million in September to 429.8 million in October.

However, the report added, the decline in employment was mostly in rural India and mainly in non-agricultural rural India. The daily wage labourer segment was the most hit as it shrunk by nearly 15 million.

The think-tank said that these figures suggested that employment opportunities in rural India during October "were highly constrained”.

But urban India showed an increase of 2.26 million salaried jobs, pushing the total number of such jobs to cross 51 million. “This is the highest level in the past 44 months but urban India is much smaller than rural India and therefore its gains cannot entirely offset the losses in rural India,” CMIE added.