The lack of stable employment opportunities offering a reasonable income and a modicum of security can be identified as the single most important challenge facing the Indian economy. If this issue could be adequately resolved, then the associated problems of poverty, insecurity, crime, and a host of other social problems could be dramatically reduced. The data on unemployment — its measures, its incidence, and its different forms — become extremely important for policymakers in this context. However, during the past seven or eight years, the quality of the data on unemployment has become contentious. The deterioration in the quality of official Indian economic statistics as well as the reliability of what is available has been part of a bigger problem of the government not willing to face unpleasant realities. The unemployment figures measured by official sources are available from the Periodic Labour Force Survey. These statistics show an improvement in unemployment rates in recent times. The rate of unemployment was measured at around 4.1% in March 2022, down from 4.2% in March 2021. On the other hand, the most well-known non-government source of data on the Indian economy is available from the Centre for Monitoring Indian Economy. According to the CMIE, unemployment in India in May 2022 was 7.14%; the figure has increased to 8.11% in April 2023. The trends for and the levels of unemployment are quite different in the two measures.
One reason for the variation in estimates stems from the way employment is defined. The PLFS defines activity as employment. Hence, if a person has been engaged in an activity for the better part of 365 days preceding the survey, the activity is taken as primary. If the respondent engaged in some additional activity during the 30 days preceding the survey, then the activity is taken as secondary. There is no direct reference to income. The estimate of the unemployment rate turns out to be lower because this methodology includes unpaid work, such as women’s work in a household, as gainful employment. On the other hand, the CMIE estimates, keeping to more accepted international norms, treat employment only as some form of paid activity. One cannot be gainfully employed without receiving a remuneration. The PLFS methodology reveals the attitude of the government. It reduces the importance of increasing women’s labour force participation rate by treating women engaged in household work as already employed. It also shows that the government is unwilling to face the unemployment problem squarely. This is unwarranted and worrying.