India unemployment rate highest in 45 years: Report

The unemployment rate in India has reached its highest in 45 years, according to a report in the Business Standard newspaper that cited an official survey withheld by the government.

The news comes only months before Prime Minister Narendra Modi faces a tough race in India’s general elections.

A political controversy over the survey erupted after the acting chairman and another member of the body that reviewed the jobs data resigned, saying there had been a delay in its scheduled December release and alleging interference by other state agencies.

The survey, conducted by the National Sample Survey Office (NSSO) between July 2017 and June 2018, showed that the unemployment rate stood at 6.1 percent, higher than the previous high point reached in 1972-1973, local media reported.

That year, when India was just coming out of a war with Pakistan and hit by global oil shocks like other oil-importing countries, the unemployment rate was 5.18 percent. 

The government has questioned the report, saying it was “not verified”.

“The government has not released data on employment as it is still being processed. When the data is ready we will release it,” Rajiv Kumar, Vice Chairman of NITI Aayog, a government policy advisory body, said at a press conference in New Delhi.

‘A national disaster’

Rahul Gandhi, the leader of the main opposition Congress party who the polls show is closing in on Modi’s lead in the May election, said the job report showed “a national disaster”.

Over the last couple of years, India’s economy has been growing rapidly by about seven percent annually, but uneven growth has meant that there are not enough new jobs to keep pace.

Young people make up a significant share of the unemployed, with 18.7 percent of urban males aged between 15 and 29 without work, and a jobless rate of 27.2 percent for urban females in the same age group.

The numbers show that Modi’s ambitious Make-in-India project, which aims to lift the share of domestic manufacturing from 17 percent of gross domestic product (GDP) to about 25 percent and create jobs for an estimated 1.2 million youth entering the market, has failed to take off.

The labour force participation rate, the proportion of the population that is working or seeking jobs, declined to 36.9 percent in 2017-2018 from 39.5 percent in 2011-2012, according to the report.

The report also provides the first numbers since Modi’s decision in November 2016 to withdraw most of the country’s banknotes from circulation overnight.

The survey comes a month after the All India Manufacturers’ Organisation released a report that said 3.5 million jobs had been lost since 2016.

That report said the job losses were mainly due to demonetisation and rising working costs after the launch of a national sales tax in July 2017, which led to hundreds of thousands losing jobs in small businesses.