The divide between the government and private agencies over India’s employment scenario was exacerbated on Monday, with two sets of official statements painting a rosier picture than the private sector narrative.
The labour ministry has issued a “rebuttal” to a recent Citibank report that said the country would struggle to create enough jobs at the current pace of economic growth. Meanwhile, the Reserve Bank of India has said that on a provisional basis, employment growth has picked up to 6% in 2023-24 from 3.2% in the previous fiscal, with 46.7 million jobs added.
However, the RBI did not provide an industry-wise breakdown of employment growth in the last fiscal year, which, according to the latest release, bucked a downward trend seen at the overall level of the economy since 2019-20 (see chart). What the RBI did present was time-series data on productivity performance (the Indian KLEMS database), supported by the International Household Survey Network.
Last week, Citibank, in a report, highlighted that the country would need more concerted measures to boost employment and skills. It had estimated that India would need to create around 12 million jobs a year over the next decade to absorb the number of new entrants into the labour market. Based on a 7% economic growth rate, India can only generate 8-9 million jobs a year, it had said.
However, according to the Ministry of Labour’s statement, “Citigroup’s report does not take into account positive trends or comprehensive data from official sources.” The report cites data from KLEMS to claim that more than 80 million job opportunities were created between 2017-18 and 2021-22, which translates to an annual average of more than 20 million.
Undoubtedly, the data from KLEMS or other official data highlighted by the ministry, such as the Periodic Survey of the Active Population or the Office for the Promotion of Production subscriber base, are also not in line with the figures published by other private agencies.
According to the Centre for Monitoring Indian Economy (CMIE), the unemployment rate in India rose to 8 per cent in 2023-24 from 7.5 per cent and 7.7 per cent respectively in 2022-23 and 2021-22. The monthly unemployment rate, according to CMIE, hit a nine-month high of 9.18 per cent in June 2023.
The employment rate, according to CMIE, fell sharply from 42.79% in 2016-17 to 36.53% in pandemic-hit 2020-21. It has improved very marginally to 37.02% in 2021-22, but fell back to a new low of 36.49% in 2022-23. The 37.2% figure for 2023-24 is unimpressive and inconsistent with official data, though these are not strictly comparable.
Many economists also cite worrying trends of reverse migration of job seekers to rural areas, low labor force participation, and a prolonged contraction of real rural wages.
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