Only 40% Indians are employed or seeking work, shows data
Just two in five working age Indian people were employed or looking for employment in 2021-22, new data has shown.
The Centre for Monitoring Indian Economy’s (CMIE) latest research also found that India’s workforce has fallen from around 445 million to 435 million in the past six years. In comparison, the labour force participation rate was above 46% in 2016-17.
Currently, about 1,085 million Indians are aged 15 or above and can be legally employed.
CMIE also found that the number of women in the Indian labour force has fallen further. In 2016-17, about 15% women were employed or looking for jobs. This fell to 9.2% in 2021-22. For men, participation in the workforce dropped from more than 74% to 67%.
The fall-off is higher in urban areas than in rural parts of the country. The employment rate slid from 44.7% to 37.5% in urban areas — a more than seven percentage point drop. Rural areas saw the figure decline from 46.9% to 41.4%.
States-related analysis show that in 23 of the 24 states with data, the participation rate declined in March 2022 compared with March 2016. The rate dropped in all the States, except in Rajasthan. The drop was more pronounced among two southern states, which had a high participation rate, to start with.
Andhra Pradesh and Tamil Nadu, whose participation rates were 54% and 56% respectively in March 2016 — occupying the top two slots at the time — also witnessed the sharpest declines. Between 2016 and 2022, the participation rate fell by 20 percentage points and 17 percentage points for Tamil Nadu and Andhra Pradesh respectively — the sharpest declines among all States.
Inflation fears allayed
However, there was better news for the Indian economy when it came to inflation, which fell in July to below 7%.
The decline in crude oil price since June, combined with growth in tax revenue collection, has eased concerns over India’s growth and inflation in 2022-23, the Finance Ministry has said.
“It is not necessarily the right thing to do to project either optimism or pessimism too far ahead in these uncertain times. For now, India looks better placed on the growth-inflation-external balance triangle for 2022-23 than it did two months ago,” the ministry said, adding that few countries around the world were better placed and “can point to a recovery in their macroeconomic fortunes in the last few months as India is able to”.
In its monthly economic review for July, the ministry said: “Household and business expectations have moderated over the last two months, indicating that the high inflation of the past few months has not entered the anchoring zone of inflation expectations.” It added that food inflation is expected to remain stable after falling to 6.8% in July while services inflation has slowed.
“Softening of inflationary pressures in India is further on the anvil as the prices of important raw materials such as iron ore, copper, tin, etc. that feed into the domestic manufacturing process, globally trended downwards in July 2022,” the ministry said.
However, the ministry conceded that risks to the Indian economy remain, including the wasr in Ukraine and other geopolitical factors that could trigger fresh concern about the supply of critical commodities like crude oil and natural gas this winter.
“That could trigger risk aversion in financial markets around the world that have begun celebrating, perhaps, prematurely, the easing of inflation pressures in the near-term in the developed world. Inflation rates are still stubbornly high,” the review noted, adding that more monetary policy tightening “would almost guarantee a recession for economic growth and corporate profits.”