India’s unemployment rate hit 45-year high in 2017/18: report

January 31, 2019

By Manoj Kumar and Devjyot Ghoshal

NEW DELHI (Reuters) – An official survey that has been withheld by the government shows India’s unemployment rate rose to a 45-year high during 2017-2018, the Business Standard newspaper reported on Thursday, delivering a blow to Prime Minister Narendra Modi just months before what is expected to be a closely fought general election.

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.

The head of the government-funded National Statistical Commission, P.C. Mohanan, said he and colleague J. Meenakshi were unhappy at the non-publication, alleging interference by other state agencies.

Rahul Gandhi, president of main Opposition Congress party, said that contrary to Modi’s promise of creating two million jobs a year, the unemployment rate had reached its highest in 45 years, and 65 million youth were jobless in 2017/18.

“Five years later, his (Modi) leaked job creation report card reveals a national disaster,” Gandhi said on Twitter.

The assessment by the National Sample Survey Office (NSSO) conducted between July 2017-June 2018 showed the unemployment rate stood at 6.1 percent, the highest since 1972-73, the newspaper reported.

In 1972/73, the NSSO data showed unemployment at 5.18 percent, after global oil shocks and a war with Pakistan.

The report said that joblessness stood at 7.8 percent in urban areas compared with 5.3 percent in the countryside. The unemployment rate for rural women stood at 13.6 percent, compared to 4.8 percent in 2011/12.

The labor force participation rate – the proportion of population working or seeking jobs – declined to 36.9 percent in 2017/18 from 39.5 percent in 2011/12, the report said.

The data provides the first comprehensive assessment of India’s employment since Modi’s decision in November 2016 to withdraw most of the country’s banknotes from circulation overnight.

After the chaotic launch of a national sales tax in July 2017, hundreds of thousands have lost jobs in small businesses.

A report released by the All India Manufacturers’ Organisation said last month 3.5 million jobs had been lost since 2016, mainly due to demonetization and rising working costs after the launch of the national tax.

The government declined to confirm or deny the findings contained in the report.

“We have not released the report. I do not want to comment on it,” Pravin Srivastava, India’s chief statistician, told Reuters.

But he said the report was not final and would be released after a review.

The gloomy jobs data could be awkward for Modi’s Hindu nationalist government to explain with a general election looming and opinion polls already showing the ruling Bharatiya Janata Party unlikely to keep its parliamentary majority.

Critics say Modi’s push for raising the share of domestic manufacturing from 17 percent of GDP to about 25 percent has not taken off over the last four years.

Modi came to power in 2014 promising to galvanize the economy and boost employment prospects for the millions of young Indians entering the job market each year.

But, while India’s economy has been expanding by 7 percent plus annually – the fastest pace among major economies – its uneven growth has meant that there are not enough new jobs to keep pace. And critics say the government’s claims of economic success have sounded increasingly hollow.

A statistics ministry official said the NSSO had submitted the report, but it was up to the government to decide when it should be released.

But another senior official, dealing with data, said the government was delaying the release as the findings were so dismal, and there were plans to incorporate data on persons added in the social security network that could help improve the overall picture.

Pronab Sen, former chief statistician of India, said unemployment had been rising since 2012 and attempts to suppress the publication of data was not a solution.

“It will only create more suspicion about the intentions of the government,” he said.

The last report published by the statistics ministry had shown that unemployment rose to 5.0 percent in 2015/16 from 4.9 percent the previous year and 4.0 percent in 2012/13.

Male unemployment stood at 4.3 percent, while it was 8.7 percent among women in 2015/16, the data showed.

Earlier this month, the Centre for Monitoring Indian Economy, a leading independent think-tank, said the country lost as many as 11 million jobs last year.

(Reporting by Manoj Kumar, Devjyot Ghoshal; Editing by Sanjeev Miglani, Simon Cameron-Moore and Nick Macfie)