Unemployment rate in India (2008 to 2023): Current rate, historical trends and more

Unemployment is a critical issue that continues to challenge the economic landscape of India. As one of the world's most populous nations with a diverse workforce, fluctuations in the unemployment rate have far-reaching implications for the country's growth and development. So, what is the current unemployment rate in India?

The latest data indicates a glimmer of hope, as India's unemployment rate has recently declined. According to the National Sample Survey Survey (NSSO), the unemployment rate for individuals aged 15 years and above in urban areas decreased to 6.8 percent during January-March 2023 from 8.2 percent a year ago. This positive development suggests a potential turnaround in the job market amidst the prevailing economic complexities. However, continued vigilance and effective policy measures remain crucial to foster sustainable job growth and secure the nation's future prosperity.

In this blog, we discuss the current unemployment rate in India a little more in-depth, along with the unemployment rate in the last ten years.

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The Current Unemployment Rate in India:

Unemployment remains a pressing concern in India, with fluctuations observed across different regions and sectors. According to the recent Bloomberg report that references data from the Centre for Monitoring Indian Economy (CMIE) for July, the overall unemployment rate in India is 7.95 percent as of July 2023.

The recent weather patterns across the country have brought about significant changes in economic conditions. As the rains have covered large parts of India, impacting nearly half of the agricultural land, expectations of higher farm production have risen. This positive development has the potential to contribute to overall economic growth.

However, despite the boost in the agricultural sector due to improved rains, there has been a notable drop in demand for labour from the non-agricultural sector in rural areas during July. As a result, the number of rural labourers seeking employment has decreased, leading to a decline in the rural employment rate.

The labour force in rural India experienced a reduction of approximately five million individuals. This decline in labour force participation was also witnessed in urban areas, indicating a broader economic weakness that demands attention.

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These changing trends in labour demand and employment rates call for thoughtful policy measures to address the prevailing economic challenges and ensure sustainable growth in rural and urban areas. It highlights the importance of diversifying economic activities to create more employment opportunities and bolster the country's financial resilience.

Unemployment Rate in India: Historical Data

If you are wondering about the unemployment rate last ten years or 15 years, we have the data in a tidy little chart for you:

Year	Unemployment Rate (percent)
2023	8.4 (in August)*
2022	7.33
2021	5.98
2020	8.00
2019	5.27
2018	5.33
2017	5.36
2016	5.42
2015	5.44
2014	5.44
2013	5.42
2012	5.41
2011	5.43
2010	5.55
2009	5.54
2008	5.41

Source: CMIE

How is the Current Unemployment Rate Calculated?

The past and current unemployment rate in India is a critical economic indicator expressed as a percentage that varies based on the prevailing economic conditions.

When job opportunities become scarce during economic downturns, unemployment tends to increase. Contrarily, during economic growth and prosperity periods, with many job opportunities available to the public, the unemployment rate is expected to decline.

The formula to calculate the current unemployment rate in India is as follows:

Unemployment Rate = Number of Unemployed Persons / Civilian Labor Force

Or,

Unemployment Rate = Number of Unemployed Persons / (Number of Employed Persons + Number of Unemployed Persons)

To be classified as unemployed, an individual must meet specific criteria:

They must be at least 16 years old and available to work full-time in the last four weeks.

They should be actively seeking employment during this period.

Some exceptions include individuals who are temporarily laid off and actively looking to rejoin their previous jobs.

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Major Economic Events Impacting the Unemployment Rate in India in the Past

Throughout our economic history, several significant events have significantly impacted the unemployment rate in India.

1. Global Financial Crisis (2008-2009): The 2008 global financial crisis severely affected India's economy, leading to a slowdown in growth and reduced employment opportunities in various sectors.
2. Demonetisation (2016): The government's decision to demonetise high-value currency notes in 2016 caused economic disruptions, particularly in the informal sector, resulting in temporary job losses.
3. Goods and Services Tax (GST) Implementation (2017): The introduction of GST aimed to simplify the tax structure, but it initially caused short-term disruptions in the economy, affecting businesses and employment.
4. Covid-19 Pandemic (2020): The Covid-19 pandemic and the subsequent lockdown measures profoundly impacted the Indian economy, resulting in a surge in unemployment as businesses closed and economic activities came to a standstill.
5. Inflationary Pressures: India has also faced inflationary pressures over the years, influencing the current unemployment rate in India. High inflation rates can erode the purchasing power of consumers, leading to reduced demand for goods and services. This can have a cascading effect on businesses, resulting in cost-cutting measures, including layoffs and hiring freezes, leading to higher unemployment rates.

FAQs

1. Which is the state with the highest unemployment rate in India? How about the state with the lowest unemployment rate in India?

As of December 2022, Haryana had the highest unemployment rate in India, at 37.4 percent. As for the lowest, data from the same time suggests Odisha is the state with the lowest unemployment rate in India at 0.9 percent.

2. How does the unemployment rate impact the Indian economy?

The unemployment rate impacts the Indian economy by influencing spending, growth, and job opportunities. A high rate hinders economic progress and can lead to social unrest, while a low rate indicates a thriving job market and a growing economy. Policymakers use it to inform strategies for job creation and economic development.