India’s unemployment rate in March rose to a three-month high of 7.8%, said the Centre for Monitoring Indian Economy last week. In February, the unemployment rate was 7.5%.

The private think tank calculates joblessness rate in India to provide estimates of the country’s workforce based on a panel size of over 1.78 lakh households.

Joblessness in India had shot up to a 16-month high of 8.3% in December, but then cooled to 7.14% in January. However, since then unemployment again crept up in the next two months, the CMIE data showed. In March, joblessness in urban areas was at 8.4% while in rural areas it stood at 7.5%.

Unemployment was the highest last month in Haryana (26.8%), followed by Rajasthan (26.4%), Jammu and Kashmir (23.1%) and Sikkim (20.7%). Uttarakhand, Chhattisgarh and Puducherry had the lowest joblessness rate.

The rise in the unemployment rate in March was compounded by a simultaneous fall in the labour force participation rate, which slipped from 39.9% last month to 39.8%, CMIE Managing Director Mahesh Vyas told PTI.

The labour force participation rate is an estimate of an economy’s active workforce.

In his monthly report on the employment situation in India, Vyas wrote that the country’s labour participation rate seemed to have settled at sub-40% levels in the financial 2022-’23, which is lower than 40.1% in 2021-’22.

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The labour participation rate had peaked to 40.5% in December but the spike corresponded with the unemployment rate rising to the highest in 16 months. This shows that the markets could not offer jobs to the new entrants, Vyas wrote in his report.

Aditya Mishra, the chief executive officer of CIEL HR Services, told PTI that in the post-festive season of October to January, employment has declined in sectors like retail, supply chain, logistics, financial services and e-commerce.

Information Technology firms and startups have also slowed down on fresh hiring, he said.

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