India's Unemployment Rate Declines To 7.95 Per Cent In July Due To Farm Labour Demand: CMIE

The report noted that due to the increased demand for laborers in farming activities, the rural joblessness rate typically declines in July

The unemployment rate in India declined in July driven by increased demand for agricultural labour in rural areas. Centre for Monitoring Indian Economy (CMIE) data showed that the total joblessness rate in India fell to 7.95 per cent in July, from 8.45 per cent in June, reported Bloomberg. At the same time, the rural unemployment rate declined to 7.89 per cent, from 8.73 per cent in June. However, there was a slight uptick in the urban unemployment rate to 8.06 per cent from 7.87 per cent in the same period.

The report noted that due to the increased demand for laborers in farming activities, the rural joblessness rate typically declines in July. However, past data has shown that the unemployment rate tends to rise again in August after the sowing season is completed.

After a sluggish beginning, the monsoon rains, which irrigate almost half of the country's farms, have gained momentum, potentially improving the prospects for agricultural production and economic growth the report said.  Adding that the rains have been 4 per cent above the usual level for this season. 

CMIE MD Mahesh Vyas told Bloomberg that while the agriculture sector saw activity with improved rains, although the demand for laborers from the rural non-agriculture sector dropped in July. 

“This led to a fall in rural labor seeking employment, which in turn led to a fall in the rural employment rate,” he said.  

The report also noted that the labor force in rural India fell by 5 million, and the labour force participation rate in urban areas also fell, as per data, indicating broader weakness in the economy. 

Last month, data analysis from the Centre for Monitoring Indian Economy (CMIE), showed that the labour participation rate (LPR) in India decreased from 40.1 per cent in the financial year 2021-22 to 39.5 per cent in the financial year 2022-23, as per an Outlook report.  CMIE's analysis reveals that India's LPR is significantly lower compared to the global estimate of 60 per cent. The analysis also indicated that approximately 90 per cent of women in their working age are not a part of India's labour force.