BENGALURU, July 22 (Reuters) – Independent economists have raised concerns about the reliability of India’s official unemployment statistics, suggesting that the actual jobless rate could be nearly double the government-reported 5.6% as of June. Despite India maintaining its position as the world’s fastest-growing major economy with a 7.4% annual growth rate in the January-March quarter, job creation has not kept pace with the demands of the country’s expanding workforce.
A recent Reuters poll found that 70% of surveyed economists, 37 out of 50, questioned the accuracy of official unemployment figures. This skepticism follows a similar survey from the previous year where experts identified persistent joblessness as a significant challenge for the government. Critics argue that outdated definitions of employment in India, a nation with a population exceeding 1.4 billion, obscure the true extent of underemployment and unemployment.
Pranab Bardhan, a professor emeritus of economics at the University of California, Berkeley, criticized the official data, stating that it fails to reflect the reality of India’s employment situation. He questioned the validity of employment definitions, noting that many Indian workers are underemployed and that the current metrics do not accurately capture this reality.
The Ministry of Statistics and Programme Implementation has defended its labor force data, emphasizing the use of Computer-Assisted Personal Interviews to enhance data quality. However, experts argue that even if the methodology is sound, the figures do not reflect deeper economic challenges. Some experts provided alternative estimates for the unemployment rate, with a median of 10%, ranging from 7% to as high as 35%.
For years, India’s official unemployment rates hovered around 4%, partly because unpaid family labor and subsistence work were counted as employment. This approach diverges from international norms, making comparisons with other countries problematic. Duvvuri Subbarao, a former Reserve Bank of India Governor, echoed concerns about the accuracy of official data and emphasized the need for job creation in sectors with greater employment potential.
While some experts, like Surjit Bhalla, a former executive director for India at the International Monetary Fund, argue that India’s Periodic Labour Force Survey (PLFS) is robust, others highlight the need for policy changes to address employment challenges. Jayati Ghosh, a professor at the University of Massachusetts Amherst, pointed out that despite the growth in wealth among the elite, real wages have stagnated, with half of the workers earning less than they did a decade ago.
To address these issues, experts have suggested prioritizing quality employment generation through improved education and skills, promoting private investment, and reducing regulatory hurdles. Santosh Mehrotra, a professor at the University of Bath, called for an industrial policy focused on manufacturing rather than the current Production Linked Incentive (PLI) scheme, which he believes is failing to deliver significant results.
— news from Reuters