India protest
© AP
Indian students participate in a protest rally in New Delhi, India this week. The march called the Young India Adhikaar March, or Young India Rights March, was held to demand the government address the problem of unemployment.
Unemployment rate in India continued to be high at 24% for the week ended May 17, same as week before. However, with industries opening up gradually, there is an increase in labour participation rate which has bounced back from the 35.4% for week ended April 26 to 38.8% now, the Centre for Monitoring of Indian Economy said cautioning that uncertainty continues to prevail.

"Halfway into the month of May, it appears that the unemployment rate is around the same level as it was in April, mostly higher by a whisker," it said, adding that the small relaxations in the lockdown since April 20 have not had any positive impact on the unemployment rate yet.

"A persistently high unemployment rate indicates that a large proportion of labour that is willing to work is unable to find jobs," it said in its weekly report released on Tuesday. According to CMIE, urban India has a higher unemployment rate of 27% compared to rural India's 23% and a lower labour participation rate of 34% compared to 41% in rural India.

According to CMIE, the relaxation, however, seems to have had an impact on the labour participation rate. "Evidently, people are coming back to the labour markets as the lockdown eases. Consequently, the labour participation rate has bounced back from its lowest level of 35.4% in the week ended April 26 to 38.8% in the week ended May 17.

"The government's apparent resistance to spurring demand through direct unilateral transfers to households and the extension of the lockdown implies that the economy would take a long time to recover," it said.

Normally, the multi-stratified survey uses a monthly sample size of 17,000 individuals who are visited in person and interviewed.

However, since the lockdown, the sample size has been reduced to 11,000-12,000 individuals who are being interviewed over phone.

CMIE further said that the much belated return of a much harrowed migrant labour to their homes is likely to complicate, significantly, the re-starting of the economy post the ever elusive lifting of the lockdown.

"Uncertainty continues to prevail over when the lockdown would be lifted, the nature of economic activity post lockdown, fears of the disease, fears of lack of medical facilities, fears of sudden loss of livelihood and the traumatic experience during the lockdown that is likely to keep labour away, within the safety of their homes in their villages or small towns," it said.

According to CMIE, restarting the economy after lifting the lockdown would therefore be a big challenge as the single biggest proposition in the economic package announced by the government so far, which is easy credit to MSMEs and street hawkers, is unlikely to make a big positive impact.