Unemployment Rate In India Doubles Within An Year
With the unemployment rate rising at a rapid rate, it would be easy to assume that April is likely to report an unemployment rate that would be the highest since 2016
Unemployment rate in the country has doubled between July 2017 and April 2018. The number of jobs in the country in the last financial year 2017-18 also fell to 406 million from 406.7 million in the previous year, highlights a data collected by Centre for Monitoring Indian Economy (CMIE).
The unemployment rate in India was around 7.25 percent during the first fortnight of April 2018. The weekly unemployment rate had spiked to 7.41 percent in the week ended April 8. This was the highest weekly unemployment rate since early October 2016. However, it is significantly higher than the observed average of around 6.5 percent in the preceding weeks.
With the unemployment rate rising at a rapid rate, it would be easy to assume that April is likely to report an unemployment rate that would be the highest since 2016.
Data of the recent past suggest that weekly estimates overestimate the unemployment rate, on an average, by about 50 basis points compared to the monthly estimates. This implies that the 7.25 percent unemployment rate observed in April 2018 could well be 6.75 percent. Even this is significantly higher than the unemployment rate of 6.2 percent in March and 6.1 percent in February.
World Bank estimates presented in its ‘Jobless Growth’ report show that India needs to add 8.5 million jobs annually to keep its current employment rate constant. But, if it aspires to catch-up to the U-curve development level in 20 years, it needs to add 13.5 million jobs a year.
Accordingly, these estimates could require real GDP growth rates of 10-15 percent per annum, which is unlikely and therefore there will be a need to add more jobs per GDP growth compared to the levels today.