In July, India experienced a decline in its overall unemployment rate due to heightened demand for agricultural labour in rural areas with the onset of monsoon rains.
According to data from the private forecaster “Centre for Monitoring Indian Economy”, the total joblessness rate decreased from 8.45% in June to 7.95% in July. The rural unemployment rate also saw an improvement, dropping from 8.73% in June to 7.89% in July. However, the urban unemployment rate slightly increased from 7.87% to 8.06% during the same period.
The monsoon rains, which now envelop the entire country, play a crucial role as they water nearly half of India’s agricultural land. This has raised hopes for increased farm product yields and economic growth. So far this season, the seasonal monsoon rains have been 4% above the normal levels.
Historical data indicates that the rural joblessness rate tends to decrease in July due to the heightened demand for labourers in farming work. This trend is driven by the agricultural activities during this period. However, after the sowing is completed, the unemployment rate tends to tick up again in August.
Mahesh Vyas, the managing director of CMIE, pointed out that although the agriculture sector experienced increased activity due to better rains, there was a decline in demand for labour from the non-agriculture sector in rural areas during July. As a result, the number of rural individuals seeking employment decreased, leading to a drop in the rural employment rate.
The data revealed that the labour force in rural India decreased by five million during this period. Additionally, the labour force participation rate in urban areas also declined, signalling broader economic weakness.
As Prime Minister Narendra Modi seeks a third term in the upcoming national polls, one of the critical challenges he faces is to generate sufficient employment opportunities for the Indian population. To address this concern, his administration has undertaken the distribution of appointment letters, aiming to fulfil its promise of offering one million government jobs by the end of this year. This move comes in response to widespread discontent over the escalating issue of unemployment in the country.