NEW DELHI: India’s rural unemployment rate fell to a four-month low in the week ended 12 July aided by good monsoon rains, better sowing of summer crop and return of segments of migrants to workplaces in urban areas.
Rural job loss rate fell to 6.34% in the week ended 12 July from 7.78% in the previous week, according to fresh data from the Centre of Monitoring Indian Economy (CMIE). This is even lower than the unemployment rate reported in the week ended 22 March, immediately before the lockdown was imposed on 25 March.
This is the lowest unemployment rate for rural India since week ended 15 March when it was at 6.07%.
The overall unemployment rate came down to 7.44% in the week ended 12 July from 8.87% in the previous week.
Economists said agricultural sector has shown a good potential to absorb people this year as good monsoon has aided expansion of sowing activities. The aggressive push for national rural employment guarantee scheme and return of tens of thousands of migrants to urban areas for livelihood reasons has helped the rural jobs scenario improve.
According to government data, kharif crop acreage rose 44% year-on-year to 58 million hectares as of last week.
“The cooling off of the rural unemployment is due to expanding farming activities, aggressive MGNREGA push in rural India, and gradual return of migrants to their ex-employers in cities and industrial belts,” said K.R. Shyam Sundar, a labour economist and professor at XLRI Jamshedpur.
“But, one must realize that this improvement in rural employment scenario is institutionalizing informality. The job loss of formal sector, the layoffs that we are witnessing is leading to self-unemployment and other odd works including agricultural work,” Shyam Sundar said adding that urban India will continue with its stubborn unemployment scenario.
According to CMIE data, urban unemployment continues to remain sticky though it fell 1.3 percentage points in the week to 12 July over the previous week mimicking the urban realities in current crisis. CMIE said urban unemployment rate tapered to 9.92% in the week to 12 July over the week to 5 July which is still much higher that the pre-covid weeks.
The cooling off of the urban job loss rate slightly is an outcome of gradual but constant unlocking process and increase in normal trading activities including at local markets, self-employment avenues etc, Shyam Sundar added.
“Those who are coming back to their previous employers due to demand in the workplace are only representing replacement jobs and nor representing new jobs. For example, an MSME owner who has started operation with limited capacity, is ready to take back his ex-employees and give them salary. That will reduce unemployment without creating new jobs. But remember the fresh lockdowns in cities like Bengaluru and Pune will have an impact on the jobs space this week,” Shyam Sundar added.