India's unemployment rate falls to 8.7% in the week ended June 13 from the monthly unemployment rate of 14.7 per cent in May as COVID cases continue to decline. Data from the Centre for Monitoring Indian Economy (CMIE) indicate that the improvement in the unemployment rate from the previous weeks is due to the easing of restrictions in various parts of the country.
The CMIE Data
According to CMIE, the monthly unemployment rate in May was 14.7%. The current urban employment rate has reduced 8.18 percentage points from the 17.88% in the last week of May to 9.7 per cent in the week ended on June 13.
Rural India has also seen a decline in the job loss rate. By the end of the second week of June, the rate dropped to 8.4% compared to the 10.63% of May.
Even after the improvement, the unemployment rate remains higher than the figures of early this year. The rate of job loss fluctuated between 6.52% and 7.97% from January to April but rose rapidly as 23 million jobs were lost during the second wave of Covid.
The soaring unemployment rate led to a massive drop in India's private final consumption expenditure (PFCE) to a three-year low at Rs 115.7 trillion in 2020-21. PFCE for the year 2019-20 was Rs 123.1 but saw a fall of six per cent in the following year.
Experts and economists say that the steep decline in the weekly unemployment rate is owing to the recovery made by the unorganized sector. The formal sector is believed to continue to struggle as its revival depends on the demand in the economy and return to the maximum capacity production in factories.
Some experts, however, remain sceptical about the accuracy of the CMIE report. NDTV reported that International Monetary Fund (IMF) executive director Dr. Surjit Bhalla questioned the 'reliability' of CMIE data.
Amidst the recovery, the onset of the monsoon could be a boost for the economy. But with the threat of another Covid wave in the near future, uncertainty surrounds Indian economic growth.