Lost in complexity: What is India's real unemployment rate?

Mint

8 hours ago

News reports often claim that India is experiencing jobless growth, validated by images and videos of thousands of youth queuing for a handful of jobs. These reports seen on TV screens or shared on social media seem drastically different when one looks at India's official headline unemployment rate—3.2% in 2023-24 and 5.6% in June 2025—leading to some level of disbelief in the statistics.
This is something that played out last month when a Reuters report, based on a poll of 50 independent economists, claimed that India's official statistics was 'inaccurate". The government was quick to issue a rebuttal, reiterating the robustness of the Periodic Labour Force Survey (PLFS), which currently captures the labour market dynamics in the country.
While there are enough instances—burying the first PLFS report until the 2019 elections were concluded and junking of the Consumer Expenditure Survey—that may lead independent observers to question the statistical system in the country, the latest claims don't hold water, labour market and statistical experts Mint spoke to said.
At the heart of the debate lie two intertwined questions: Is India's official unemployment data inaccurate, and does the country have a significant joblessness problem? The answer to the first is a definitive no, and the answer to the second is a definitive yes.
The devil is in the details
From the statistical standpoint, PLFS checks all the boxes as per the international standards in capturing the labour market as best as possible. Moreover, there has been an earnest effort to make unemployment data available with lesser time lag. The latest move to release monthly data from April this year takes a step further in capturing the job market dynamics frequently.
When it comes to joblessness problem, the real story lies beyond the headline figures. As against the all-India average annual figure of 3.2% in 2023-24, which may appear low, the unemployment rate for graduates is as high as 13% and for the youth (aged 15-29 years): 10.2%. Such details are not available for the latest addition: monthly reports. But they do reveal high unemployment rates in urban areas, especially among women.
'One number cannot describe a country of 1.4 billion," says P.C. Mohanan, former acting chairman of the National Statistical Commission. 'You have to break it down to understand what is really going on".
Amit Basole, a professor at Azim Premji University, concurs. 'If you look at educated youth in urban areas, that's where joblessness is a real crisis," said Basole.
While the experts said the unemployment report captures the high level of unemployment among where it exists—among educated, young, and urban population—there is a chance of a high level of underemployment that the survey, or for that matter any other survey, isn't designed to capture holistically.
Unemployment is quite simply defined as people who are not working and are also looking for a job. This is then captured using two reference periods: preceding 365 days under the usual status and preceding seven days under the current weekly status. This is where underemployment slips through the cracks.
'If you ask a casual labour whether he or she has been working anytime during the last 365 days, the answer is always yes. But this does not mean these people are working to their full capacity," said Pronab Sen, former chief statistician of India. To understand this dynamic, Sen said, unemployment rate under the current weekly status offers a better picture.
Policy blindspot
For different people—and by different measures—unemployment rate varies in the country. While the unemployment numbers have come down in the past few years by most measures, it can majorly be attributed to the rise in self-employment after the covid-19 pandemic and does not translate into a real improvement.
'If the kind of employment that has risen is not the desirable kind, self-employment, unpaid family work, then that doesn't reflect a very healthy economy," Basole said. When it comes to creation of good-quality jobs for educated youth, the numbers speak for themselves.
While there is little doubt over the robustness of the PLFS reports that provides abundant data to understand the complex labour market in India, this does not mean there is no room for improvement.
Mohanan said the sample size of the survey needs a discussion, and it should be increased, keeping in mind the rise in India's population to get more robust estimates, especially for small groups.
Currently, PLFS surveys about a 100,000 household, which is somewhat the same as the last employment and unemployment survey, but smaller than the sample sizes used in the 1960s and 1970s.
'One lakh looks alright for national estimates, but if you are looking at smaller segments of population like youth or the educated, it becomes slightly inadequate," Mohanan added.