December 2022 saw India’s urban unemployment rate rise to a massive 10.09 per cent. It touched a double-digit figure for the first time, since June 2021, when the country was recovering from second wave of the pandemic, according to the latest figures released by the Centre for Monitoring Indian Economy (CMIE).

In December 2022, India’s overall unemployment rate was 8.3 per cent, the highest in the last 15 months. The rural unemployment was however 7.44 per cent, 0.11 percentage points lower than November’s figures.

According to the CMIE estimates, since January 2016, urban unemployment has mostly ruled higher in India, compared to rural unemployment, with the exception of just five months. 

Previously, a rise in urban unemployment in India was seen in September 2022 when the rate was 9.57 per cent. Even though it came down to 7.7 per cent in October, things only got worse from there. 

Rising unemployment

Commenting on the rising urban unemployment, economist Sona Mitra said, “The last decade witnessed increased education enrolment. Now that that cohort is seeking jobs and if adequate jobs are not created, naturally unemployment would rise. This will happen especially in urban areas as aspirations for better jobs are from urban areas.” Mitra is a principal economist with IFMR’s initiative for What Works to Advance Women and Girls in the Economy (IWWAGE).

At the same time, Shantanu De Roy, Assistant Professor of Economics at TERI School of Advanced Studies said the National Rural Employment Guarantee Act (NREGA) played a role in keeping rural unemployment at bay, while the absence of a similar scheme could be pushing joblessness in urban areas.

A non-uniform trend

As diverse as India is a country, the urban unemployment rate is also not uniform across States. For instance, the front-runner here is Haryana, where 41.2 per cent of the labour force in urban areas was unemployed in December. This, however, is not unusual for the State. The state has been consistently recording a double-digit urban unemployment rate since August 2017, according to CMIE’s monthly time series. The overall unemployment in Haryana was 37.4 per cent last month.

However, Haryana’s Chief Minister Manohar Lal Khattar has refuted the CMIE data many times. In September 2021, he said that their (CMIE’s) claims that the unemployment rate in Haryana has increased were not based on facts. “Those specialising in the field of employment believe that the data displayed by CMIE can’t be called fair and transparent. Its survey has many flaws related to design, size, data, questionnaire, etc,” he told The Hindu.

CMIE’s unemployment rate is computed as the number of job-seekers as a per cent of the total labour force, which is the sum of employed people and job-seekers. 

The other States with high urban unemployment rates are Rajasthan (28.2 per cent), Assam (27.4 per cent) and Bihar (27 per cent), and Delhi (21.1 per cent). Rajasthan and Haryana are also among the States with the highest rate of unemployment among graduates. On the other side of the spectrum, there are States like Gujarat where the urban unemployment rate is just 2.7 per cent. In Tamil Nadu and Odisha, it is 2.8 per cent.

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