Unemployment at one-year high, despite growth in GDP and PMI
India’s unemployment rate has surged to a new high. In August, the rate surged to a one-year high of 8.28 per cent, as per data released by the Centre for Monitoring Indian Economy (CMIE).
The unemployment rate in July was 6.8 per cent, CMIE data showed. The gross figure for employment in July was 397 million, which fell to 394.6 million in August.
Breaking up the unemployment rates into urban and rural, CMIE Managing Director Mahesh Vyas, speaking to PTI, said “urban unemployment rate is usually higher” but the former “shot up” from the average of 8 per cent to 9.6 per cent in August. The rural unemployment rate increased too, but to a much lesser extent: 7.7 per cent, as against the average of 7 per cent.
“It’s been a bad month. Four million more people came to the market but we couldn’t provide them jobs. Employment shrunk and the economy employed less people compared to July,” Vyas told Deccan Herald by phone.
The state of unemployment is despite the GDP growing at 13.5 per cent in the quarter ending June 2022 on a year-on-year basis (that is, April-June 2022 compared to April-June 2021) and the manufacturing sector activity, measured by Purchasing Manager’s Index (PMI), in August witnessing the second-strongest improvement in nine months.
The GDP growing at 13.5 per cent meant, according to Union Finance Secretary TV Somanathan, speaking to the media after the numbers were released, that “GDP has recovered the pre-pandemic output and gone beyond by near 4 per cent”.
However, this figure for the GDP is much lower than the 16.2 per cent forecast by the RBI’s Monetary Policy Committee (MPC) and the 15.5 per cent projection by a Bloomberg poll of economists.
According to CMIE’s Vyas, one of the major reasons for the high unemployment rate is the worsening situation in rural India due to erratic rainfall affecting sowing activities.
