Despite pandemic and lockdown, India's unemployment rate fell to 4.2% in 2020-21

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The coronavirus pandemic and the nationwide lockdown seemed to have had a little adverse impact on India's job market, with the unemployment rate falling to 4.2 percent in 2020-21 (July-June) according to the latest government data.

As per the Periodic Labour Force Survey (PLFS) for 2020-21 (July-June), released by the Ministry of Statistics and Programme Implementation on June 14, India's unemployment rate declined even as the labour force participation rate rose to 41.6 percent.

In 2019-20 (July-June), the unemployment rate was 4.8 percent and the labour force participation rate was 40.1 percent.

The fall in the unemployment rate and a rise in the labour force participation rate in the 12 months starting July 2020 is surprising as the first three months of this period saw the Indian economy contracting and enter into a technical recession.

While GDP growth improved in subsequent months, it averaged 4.2 percent per quarter over the survey period, buoyed largely by a favourable base effect-fuelled 20.1 percent growth in April-June 2021.

In its report, the statistics ministry said fieldwork for the survey was suspended from March 18, 2020, due to the pandemic and resumed only in June 2020. Work was again suspended in April 2021 due to the second wave and resumed only gradually starting the first week of June 2021.

Unemployment in the quarterly report for urban areas is measured as per the 'Current Weekly Status'. A person is considered unemployed in a week under this definition if they don't work even for an hour on any day despite being available for work at least for an hour on any day. The employment status is determined on the basis of a reference period of the last seven days preceding the date of the survey.

The annual report estimates employment indicators using the Current Weekly Status and the 'Usual Status'. The Usual Status considers both the Usual Principal Status and the Subsidiary Status.

This includes persons who either worked or were seeking work for a relatively long part of the 365 days preceding the date of the survey and those from the remaining population who had worked at least for 30 days during the reference period of 365 days preceding the date of the survey.