Jobless rate surges to 7.45% in Feb as rural unemployment goes up

India's unemployment rate surged to 7.45% in February, primarily due to an increase in the rural jobless rate, according to the Centre for Monitoring Indian Economy (CMIE) data. Urban India fared better than rural India in terms of employment, while rural India experienced a significant increase in unemployment, the data shows. 

The country’s unemployment rate in February surged from 7.14% in January 2023. While rural employment declined from 8.55% in January to 7.93% in February 2023, the jobless rate in rural areas rose from 6.48% in January to 7.23% in February.

The unemployment rate was the highest in Haryana at 29.4%, followed by Rajasthan at 28.3% and Sikkim at 21%. "The overall rise in unemployment in India in the month of February was driven by a significant rise in unemployment, specifically in rural India. The rural labour force expanded by a mere 0.26 million and around 2.3 million people became unemployed in February. Conversely, urban India fared well in terms of employment," Mahesh Vyas, CEO, CMIE.

The number of unemployed persons in the labour force in India increased from 31.5 million to 33 million. While the rise in the unemployment rate was accompanied by a small increase in the labour participation rate, the employment rate in February remained at levels recorded in the previous month. 

According to the CMIE data, there was a marginal improvement in India’s labour participation rate to 39.92% in February compared to 39.8% in January 2023. "The size of the labour force increased from 440.8 million to 442.9 million," writes Vyas.

Overall, the workforce in India expanded from 409.3 million to 409.9 million between January and February 2023. In this period, the working-age population expanded by a larger number of around 2 million. 

"As a result, the employment rate, which is the percentage of employed persons in the working age population (aged 15 years and above), did not record any significant change in February as compared to January. It remained at 36.9 per cent."

The labour market metrics for February suggest disparate regional trends. "In rural India, unemployment went up as a result of a fall in employment. On the contrary, the rise in employment in urban India comes as good news. This is also accompanied by a considerable fall in the number of persons in the unemployed pool in urban India," writes Vyas.

The labour participation rate in urban India inched up to about 38% from 37.5%. Around 1.9 million people entered the urban labour force in February, the CMIE data shows. Also, the urban employment rate increased by 0.63 percentage points from January to 34.96% in February. "This is the highest employment rate recorded in urban India since September 2020."