Rural joblessness pushes unemployment up in October
NEW DELHI: The country’s jobless rate rose as unemployment surged in the nation’s rural areas, even as non-farm jobs notch up gains with the economy emerging from pandemic curbs.
Unemployment in October rose to 7.75% from a threemonth low of 6.86% in September, data from private research firm Centre for Monitoring Indian Economy Pvt. showed
Monday. Rural unemployment jumped to 7.91% from 6.06% the previous month, whereas urban joblessness dropped to 7.38% from 8.62%, the data showed.
The hinterland-fueled growth in the unemployment rate is unlikely to be a major cause for concern to India’s policy makers just yet, given manufacturing activity is expanding amid business optimism hitting a six-month high in October. Data from IHS Markit showed manufacturing and services sectors have been adding jobs in recent months to keep up with stronger demand in the economy.
The data from CMIE is one of the early indicators of economic activity and is tracked widely in the absence of timely government data. India’s labor ministry recently reinstated efforts to publish official data, but it doesn’t give a complete picture of the job situation in the country.
Meanwhile, the digitisation drive and pandemic-induced emergence of the gig economy have led to a faster formalisation of the economy, with the share of the informal sector shrinking to just 15-20% in 2021 from 52.4% in 2018, according to an SBI Research report.
Share of the informal economy has fallen drastically to 15-20% of the gross value added (GVA) or the formal GDP in 2020-21 from 52.4% in 2017-18 due to digitisation and the rapidly expanding gig economy, said Soumya Kanti Ghosh, the group chief economic advisor at SBI.
The share of the same had stood at 53.9% in 2011-12.
According to Ghosh, many measures since the note-ban in November 2016 have accelerated digitisation of the economy, and the pandemic-induced emergence of the gig economy has facilitated higher formalisation of the economy, at rates possibly much faster than most other nations.
The note ban hit hardest the informal sector which then constituted 93% of the workforce. The second blow to the informal economy was the GST and the final and the hardest hit came from the pandemic. At least ₹13 lakh crore has come under the formal economy through various channels over the past few years, including the recent scheme on the E-Shram portal, the report said.
Real GDP was estimated at ₹135.13 lakh crore in FY21 but lost 7.3% of that in FY22 after the worst economic contraction on record due to the pandemic.