Rural unemployment doubles to 14% in 1 week - Hindustan Times
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Rural unemployment doubles to 14% in 1 week

ByPrashant K Nanda, Livemint, New Delhi
May 19, 2021 07:46 AM IST

Rural unemployment shot up to 14.34% in the week ended May 16 from 7.29% in the week ended May 9, data from the Centre for Monitoring Indian Economy (CMIE) showed.

Rural unemployment has nearly doubled in a week as lockdowns and surging Covid infections in villages brought economic activity to a halt. A lull in farming is adding to joblessness.

According to the Centre for Monitoring Indian Economy (CMIE), the employment rate and labour force participation rate have come down significantly(HT Photo )
According to the Centre for Monitoring Indian Economy (CMIE), the employment rate and labour force participation rate have come down significantly(HT Photo )

Rural unemployment shot up to 14.34% in the week ended May 16 from 7.29% in the week ended May 9, data from the Centre for Monitoring Indian Economy (CMIE) showed. Rural unemployment is at a 50-week high: the last time it was higher was nearly a year ago, in the week ended June 7, 2020.

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Similarly, urban unemployment climbed to 14.71%, three percentage points more than a week ago, while the national unemployment rate soared to 14.45% from 8.67%, highlighting a jobs crisis amid the second Covid wave.

Economists said the high infection rate and lack of employment opportunities in urban clusters due to lockdowns forced people to leave for their villages. But in rural pockets, there aren’t enough income opportunities. Besides, rural lockdowns and curfews have left people jobless both in formal and informal sectors, and a lull in farm activity in May is adding to joblessness.

“The urban houses and rural hamlets have got infected with the coronavirus this time. Unorganized manufacturing in rural and semi-urban India has largely come to a halt. This is increasing unemployment across India both in the formal and informal sector,” said Santosh Mehrotra, a labour economist and retired professor of JNU.

“The MSMEs (micro, small and medium enterprises) are in bad shape, and informal jobs, as well as self-employment in rural India, are almost in tatters. The situation may actually get worse over the next few weeks if we don’t manage to tackle the pandemic in rural India. There is a demand shock, there is a supply chain constraint, and there is income loss—it’s a critical situation for any economy and labour market,” Mehrotra said.

Chandrakant Salunkhe, president of SME Chamber of India, agreed. “Thousands of MSMEs have closed down in the second wave. There is a demand crunch, and companies to whom we supply are not taking orders, which means products are on hold, as are payments. “Then there is an increase in raw material prices, which is impacting our business. The revival of MSMEs will improve the job sector, but that may not happen for months,” said Salunkhe, also the managing director of Salunkhe Packaging Industries in Maharashtra.

“A lot of workers have left for their hometowns from industrial pockets like Pune, Mumbai, and Aurangabad, and from the industrial clusters of Gujarat, Karnataka and other places. It’s a crisis for them as well,” he said.

Arup Mitra, a professor of economics at the Institute of Economic Growth in Delhi, said India is “observing high unemployment rate, high under-employment, low productivity, and low-income capacity, across rural pockets, and all over the country.”

According to the CMIE, the employment rate and labour force participation rate have come down significantly. At the all-India level, the employment rate has fallen to 34.67% in the week ended May 16 from 37.72% a week ago. During the wee, the rural employment rate has declined to 36.26% from 39.84%. Both Mitra and Mehrotra said the gap between the harvest season and sowing till monsoon, the absorption in the agriculture sector will be low.

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