India’s unemployment rate remains high despite lifting of lockdown measures

The Centre for Monitoring Indian Economy (CMIE) has said the unemployment rate in the country was 24 percent for the week ending May 17, remaining unchanged from the previous week’s figure.

According to its report, however, the labor participation rate rose to 38.8 percent as industries started opening up gradually after the nationwide coronavirus lockdown.

“Halfway into the month of May, it appears that the unemployment rate is around the same level as it was in April, mostly higher by a whisker,” CMIE said, adding that the small relaxations in the lockdown since April 20 have not had any positive impact on the unemployment rate yet.

“A persistently high unemployment rate indicates that a large proportion of labor that is willing to work is unable to find jobs,” it said.

Statistics showed that urban India has a higher unemployment rate – 27 percent compared to rural India’s 23 percent – and a lower labor participation rate of 34 percent, compared to 41 percent in rural India. 

According to CMIE, “Uncertainty continues to prevail over when the lockdown would be lifted, the nature of economic activity post lockdown, fears of the disease, fears of lack of medical facilities, fears of sudden loss of livelihood and the traumatic experience during the lockdown that is likely to keep labor away, within the safety of their homes in their villages or small towns.”

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It said that restarting the economy after lifting the lockdown would therefore be a big challenge, as the single biggest proposition in the economic package announced by the government so far – easy credit to MSMEs (Micro, Small and Medium Enterprises) and street hawkers – is unlikely to make a big positive impact. 

Last week, India’s Prime Minister Narendra Modi announced a new stimulus package of a combined Rs 20 lakh crore ($266 billion) – approximately ten percent of the country’s GDP.

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