Unemployment Rate in India

India’s Unemployment Rate Fell from 5.8 to 4.2 Percent in 2021: Indian Government

The Ministry of Finance recently notified that the unemployment rate in India fell from 5.8 percent in 2019 to 4.2 percent in 2021. Nirmala Sitharaman, minister of finance and corporate affairs, presented these finding as part of the Economic Survey 2022-23 in the Parliament recently. The ministry stated that the labour markets had recovered beyond pre-Covid levels, in both urban and rural areas, as observed in supply-side and demand-side employment data.

Th report stated that according to the Usual Status in Periodic Labour Force Survey (PLFS), the Labour Force Participation Rate (LFPR), Worker Population Ratio (WPR) and unemployment rate (UR) in PLFS 2020-21 (July to June) have improved for both males and females in both rural and urban areas compared to PLFS 2019-20 and 2018-19. Some of the noteworthy statistics that were highlighted in the report are as follows:

  • Labour Force Participation Rate for males has gone up to 57.5% in 2020-21, as compared to 55.6% in 2018-19.
  • Female Labour Force Participation Rate has gone up to 25.1% in 2020-21 from 18.6% in 2018-19.
  • Rural Female Labour Force Participation Rate from 19.7 % in 2018-19 to 27.7% in 2020-21.

Why is there Drop in India’s Unemployment Rate?

The Union Government attributed the drop in unemployment rate in India to progressive labour reform measures such as Central Labour Laws being amalgamated, rationalised, and simplified into four Labour Codes, namely:

  • The Code on Wages, 2019 (August 2019).
  • The Industrial Relations Code, 2020.
  • The Code on Social Security, 2020.
  • The Occupational Safety, Health & Working Conditions Code, 2020.

“According to the survey, rules made under the Codes have been entrusted to Central Government, State Government and at the appropriate level. As of 13 December 2022, 31 States also have pre published the draft rules under the Code on Wages, 28 States under Industrial Relations Code, 28 States under Code on Social Security, and 26 States under Occupational Safety Health and Working Conditions Code,” said the report submitted in the Parliament.

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