Rural unemployment rate falls below 8%

The Mint
June 22, 2020
Posted by Prashant K. Nanda

Rural India could be bouncing back to life with unemployment rate dropping to 7.26% in the week ended 21 June against 10.96% in the preceding week as more livelihood avenues open up. In contrast, urban India continues to see higher joblessness while it struggles with the rise in covid-19 cases. The fall in rural unemployment rate to below 8% is the lowest in three months, and even lower than the week before the country went into a lockdown on 25 March.
According to fresh data released by the Centre for Monitoring of Indian Economy (CMIE), in the week ended 21 June, the overall employment rate was recorded at 8.48%, over three percentage points lower than last week. In the pre-lockdown week, the job loss rate in rural India was 8.29% and overall unemployment rate was 8.41%. The urban unemployment rate stayed stubborn at 11.19% indicative of the impact of the spread of covid-19 in cities and the revival time for formal sector job creation.
Experts and economists said the opening of rural economy, good progress of the monsoon and a robust sowing season is aiding a pick up in employment in rural India. The progress of monsoon in India is satisfactory with the current covering the entire south and eastern India and progressing to north India. Aroop Mitra, a professor of economics at the Institute of Economic Growth in New Delhi said rural India is picking up because of good agriculture activity following a normal monsoon, and an oversupply labour market is catching up to any work available.
“A good sowing season is helping the rural employment environment. But, an oversupply labour market is catching up to any work available. There is distressed employment in rural areas hence the labour force participation may be going up," Mitra said adding that extra spending by the Centre and states in dedicated schemes like the national employment guarantee scheme and the new jobs scheme to offer informal work to migrants will help the cause. “Rural India is seeing a pickup in employment. Other than unlocking, we are seeing a good rainfall and the sowing season has been very good," CMIE managing director and chief executive Mahesh Vyas said. “The extra allocation of funds for MGNREGA and the Garib Kalyan Rozgar Abhiyan are aiding the employment creation in rural areas," Vyas said adding that the labour force participation is also picking up which is a positive development.
But urban areas will take time to revive, experts said. “The unlocking will slowly absorb people in urban areas but there is a fear factor due to the rising covid-19 cases. We have to live with the situation in cities for few more months," said Mitra. In urban areas, the numbers may be growing slowly but one must realize that the long term job prospect and formal job creation will take time, he said. "The equilibrium is low in urban areas– less demand due too several factors including reverse migration and less workforce participation. Don’t rejoice, these numbers are not indicative of the revival in economy. It will take time," Mitra added.

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