The dismal GDP data released last week confirms that India's unemployment rate is on a graveyard spiral.
Latest data from the Centre for Monitoring Indian Economy (CMIE) shows that unemployment rate already peaked at 8 per cent in August. That's a level last seen in September 2016. Worryingly, both the urban and rural unemployment rate rose to 9.6 and 7.8 per cent respectively, putting a chill on Prime Minister Narendra Modi's 2014 poll promise of creating 10 million jobs every year.
Complicating matters, the government is once again behind schedule in releasing the quarterly Periodic Labour Force Survey (PLFS) for urban areas. The FY19 survey for rural areas is also pending.
Economists are, however, divided on how one should read the country's rising joblessness. While some observed that the ongoing economic slump led by compression in consumption demand and private investments will aggravate the unemployment rate further, others argued otherwise.
"The unemployment rate remains low in India. There are comparability issues between PLFS and earlier Employment-Unemployment surveys. But even setting those aside, though the 6.1 per cent rate in the 2017-18 survey is higher than any of our past surveys have produced, it's not a high rate by international standards. In many countries, 6.1 per cent is seen as the natural rate of unemployment," Arvind Panagariya, former vice-chairman, Niti Aayog told Express. He's currently the Professor of Economics and the Jagdish Bhagwati Professor of Indian Political Economy at Columbia University.
According to him, India's true problem is, what he calls, underemployment. "The vast proportion of the workforce remains in low-productivity, low-wage jobs. The situation is getting better over the years but improvement needs lots of acceleration," he reasoned.
But not all agree. Besides decelerating demand and investment, high GST rates on cement, steel, and other construction material will likely wreak havoc on both formal and informal employment, if the government fails to act soon.
"We have been in a state of denial for long. The compression in consumption demand and investment will hurt employment in the coming months. Moreover, the complications of GST rate with excess cesses and high rates on cement and steel will have a significant effect on employment including the organised sector," said M Govinda Rao, former member of the Prime Minister’s Economic Council.
The impact is already visible in sectors like auto, which is feared to have left 2.15 lakh workers out of a job already.
The National Sample Survey Office's (NSSO) first PLFS survey showed devastating data pegging India's unemployment rate at a 45-year-high of 6.1 per cent in FY18. The report, which the government withheld from release ahead of the 2019 general elections, prompted anxiety-inducing unemployment debates, besides sparking intellectual contradictions with some dismissing the survey methodology, while others and the opposition argued in favour.
Typically, NSSO's jobs surveys are done once every five years and the last one came in 2011. But in FY17, it started the PLFS including quarterly surveys for urban areas and annual surveys in rural areas.
As per the NSSO's data release calendar, the quarterly PLFS report for urban areas and FY19's PLFS report should be out by now, but so far there's no official word yet.
"Basically, the quarterly surveys are for urban areas and they should have been released by now (if the survey was conducted). Besides, the FY19 report is also due," said P C Mohanan, who quit as acting Chairman, National Statistical Commission, protesting the delay in releasing NSSO's unemployment report.