Joblessness grows in cities, villages: CMIE

Updated on Jul 27, 2021 12:03 AM IST

According to CMIE, which tracks the labour market with proprietary tools, urban unemployment continues to be higher than rural at 8.01%, up from 7.94% in the previous week

A man sits outside a closed store in Mumbai. (Representational image/Bloomberg)
A man sits outside a closed store in Mumbai. (Representational image/Bloomberg)
By, New Delhi

India’s unemployment rate soared to 7.14% in the week ending July 25, compared to a 5.98% rise the previous week (ending July 18), as joblessness increased both in urban areas and the rural hinterland, data from the Centre for Monitoring Indian Economy (CMIE) released Monday showed.

However, on a monthly basis, the joblessness rate showed an improvement, inching down from the near 10% levels in June, with economic activities picking up pace as the second wave of coronavirus disease infections continues to ebb.

Even so, unemployment, mainly due to the effects of restrictions imposed due to the pandemic, remains high, experts said. Unemployment data from the CMIE, a widely cited gauge, are not considered to be official, but the country doesn’t put out similar high-frequency employment/unemployment data.

According to CMIE, which tracks the labour market with proprietary tools, urban unemployment continues to be higher than rural at 8.01%, up from 7.94% in the previous week. The rural joblessness rate stood at 6.75%, a sharper rise from 5.1% in the previous week.

On Monday, another widely cited barometer of business expansion, the Nomura India Business Resumption Index (NIBRI), dropped to 95.3 for the week ending July 25 from 96.4 in the previous week. A fall in the index represents a dip in business activity. The index was “still at levels prior to the second wave but 4.7 percentage points below pre-pandemic levels”, Nomura, an investment firm which complies the index, stated.

In any jobs survey, people with jobs are categorised as employed. People without jobs but looking for work are considered unemployed. The labour force participation rate is equal to people who are employed plus those who are not. Simply put, the unemployment rate is then the number of unemployed divided by the labour force times 100.

Monday’s numbers show the rural impact of the second wave, which had a “deeper and wider penetration into the hinterland”, said Gautam Shahi, an economist with the ratings firm, Crisil Ltd.

Most economists agree that growth and employment will see improvements in the coming weeks, but the key variable still is vaccination. “The pace of vaccinations stagnated, with the month-to-date average in July at ~3.7mn doses/day. We currently forecast a faster pace of vaccination starting in August, but the recent pace suggests risks are skewed towards a delay,” Sonal Varma, economist with Nomura Securities, wrote in a note.

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  • ABOUT THE AUTHOR

    Zia Haq reports on public policy, economy and agriculture. Particularly interested in development economics and growth theories.

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