Modi 2.0 gets new challenge. Unemployment rate climbs to 6.1%

India's unemployment rate at 6.1%, reaching a 45-year high

The surge in the unemployment rate despite professed emphasis towards creating employment has sent shivers down the spine of the Indian government. BJP had promised to create employment opportunities in labour-intensive manufacturing & tourism sector. Mr Narendra Modi led BJP government had promised to generate more than 1 crore jobs prior to 2014 elections. The promise, however, seems to have faded during their tenure.


The authority is responsible for monitoring the statistics and framework of the country National Statistical Commission (NSC) had approved the report in December 2018. However, the government decided to withhold the report.


The data released by the PLFS


The National Democratic Alliance (NDA) released its first Periodic Labour Force Survey (PLFS). The data released disclosed the unemployment rate peaked at a 45-year at 6.1% for 2017-18.

The NDA government defended the reports by stating that the data released was based on a new metric. The government further cleared that comparing the present unemployment rate with previous rates wouldn’t fetch fair outcomes.


This is due to a transformation in the data collection process, collection of samples, sampling designs, etc.


The unemployment data released, showed 5.8% growth in the economy in the fourth quarter of FY19. The growth pace of the Indian economy has been slowing down since the past 17 quarters. India lost its glory of the fastest growing economy to China for the 1st time in 2 years.


The Ministry of Statistics & Programme Implementation showcased that 5.8% of men & 3.8% of women are unemployed in rural areas. Furthermore, urban areas witnessed a higher set of numbers for unemployment where men account for 7.1% & women at 10.8%.


The educated rural population possessing a minimum age of 15 & above witnessed an unemployment rate at the usual rate of 10.5% for males & 17.3% in the case of females. Further, the unemployment statistics for the educated urban population stood at 9.2% for males and 19.8% for females.


The ministry added the Labour Force Participation Rate (LFPR) for the third quarter of FY19. The LFPR has been decreasing from 39.5% in the year 2011-12 to 36.9% in 2017-18. The LFPR for females stood at 19.5% participation rate against the rate of 73.6% for males.


In the youth segment


The rate of unemployment among youth (age ranging from 15- 29 years) inclined sharply for the period of 2017-18. The unemployment rate in rural areas for males stood at 17.4% compared to a mere 5% in 2011-12.

The rate of unemployment in rural areas for females stood at 13.6% from 4.8% in 2011-12. The unemployment rates in the case of urban regions witnessed much higher rates. Male unemployment rates jumped over 10% to 18.7% in 2017-18 compared to 8.1% in 2011-2012. Further, the female unemployment rate stood at 27.2 % from 13.1 % in 2011-12.


Major causes for declining unemployment


1) Demonetisation-

Demonetisation, which is considered to be one of the key changes introduced in the economy during NDA’s tenure, owns its share in eliminating jobs. The Centre for Monitoring Indian Economy (CMIE) is an independent body specialises in producing economic and business databases of the country. Within the first 4 months after demonetisation, 15 lakh employees were left unemployed in the economy. The sudden physical liquidity crunch in the system resulted in a dilemma for the unorganised sector in the economy which heavily relied on cash for primary transactions. 


2) Economic slowdown-

The Indian economy is slowing down with the gross domestic product (GDP) plunging to a five-year low. The GDP of India for the fourth quarter of 2019 stood at 5.8%. Now that the ruling party has reclaimed the power, the markets expect the government to introduce measures to fix the slowdown and infuse life back into the Indian economy. With stock indices conquering all-time highs reflects the confidence of markets in the growth-boosting measures.

3) Employment generation-

India will be the most populated country by 2024. We has been growing and prospering rapidly but the problem of unemployment still hovers above the country. The biggest component responsible for the dilemma is the lack of employment opportunities. The number of students graduating & post-graduating is much higher compared to the available opportunities in the market. This has led to an imbalance in the economy and is a diminishing the scope for employment.




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