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India’s unemployment on the rise in December, while lakhs run hither and thither to seek jobs.

India’s unemployment rate in December 2020 stands at 9.06%, as gathered by the data from the Centre for Monitoring Indian Economy (CMIE) has revealed, with the number of unemployed increasing by 11.3 million in the month. This is the highest in six months after June when it was at 10.18% when the economy began recovering following a strict lockdown and its financial impact. This is also a first for the rural unemployment rate being higher than urban in 2020. While the rural unemployment rate stood at 9.15%, the urban employment rate was at 8.84%. India’s Gross Domestic Product (GDP) growth has fallen below 5 percent in the last two quarters as weak demand and slump in investment still weigh down the country’s economic process momentum.

The CEO of CMIE, Mahesh Vyas said, “This huge increase places the number of unemployed higher than it was before the lockdown. The average count of unemployed in 2019-20 was 33.3 million. The highest count within the year was 37.9 million in March 2020 and it had been below 36 million before that,”, “The farming sector saw a loss of around 9.8 million jobs.”, “A larger number of individuals were trying to find a job in December, with the labor force increasing from an estimated 421 million in November to 427 million in December.”,

“But labor markets weren’t ready for this six-million surge in labor. It thus left them largely unemployed,”.STATE WISE CHECK : ( According to CMIE data ) Haryana (32.5%) and Rajasthan (28.2%) had the highest unemployment rates in December 2020, Odisha (0.2%) and Tamil Nadu (0.5%) saw the least. Among the Southern states,

Karnataka was at 1.4%, Kerala was at 6.5%, Andhra Pradesh was at 6.7% and Telangana was at 7%. What was the reason that led to this steep rise!? According to CMIE, the main issue was the failure of the farm sector to absorb the influx of labor. The data revealed “Farming is that the last option of the many who are rendered jobless. But, December is not the month in which it can absorb labor. This is the month when it sheds jobs. In each of the past five years since 2016, labor employed in farming in December has shrunk compared to November. In December 2019, the work loss from farming was 10 million. In December 2020, this sector shed an estimated 9.8 million jobs,”.
What is LPR and what is its relevance here?!

LPR -> Labour Participation Rate. It is a measure of an economy’s active workforce, which is calculated by dividing the labor force by the total working-age population.
Relevance -> The rise in unemployment in December is the result of a partial recovery of the labor participation rate (LPR). Alarmingly, the LPR had fallen to 40 percent in November from 40.7 percent in the preceding two months. Although in December, the LPR recovered partly, to about 40.6 percent.

Mahesh Vyas, the CEO of CMIE added, “The influx of people looking for work shot up and the labor force increased from 421 million in November to 427 million in December. But, the labor markets were not ready for this sudden six-million surge in labor, leaving them largely unemployed.”

The irony is it acting as a double-edged sword, i.e the fact that the rise in employment is worse at a time when the prices of household items are rising at a faster rate. Inflation has been around 7 percent in recent months. In the meantime, the count of unemployed elevated to 3.87 crores in December 2020, compared to 2.74 crores in November.

Subsequently, employment has persistently remained below year-ago levels and also it has majorly fallen short of the two-years ago levels, which can prove to be quite a deterrent for our nation’s growth in the coming years.