Bulk of India’s unemployed population is in the middle-income households that earn between Rs 2 lakh and Rs 5 lakh a year despite the fact that they have the highest labour participation rate among non-rich household groups, the Centre for Monitoring Indian Economy said.
Citing its Consumer Pyramids Household Survey (CPHS) data, CMIE said the middle class households accounted for half of the total households and also half of the unemployed and the largest number of unemployed people while the average labour participation rate (LPR) of this group was 43% compared to the overall average LPR was 40.8%. Also, it experiences an elevated unemployment rate of over 9%.
“India’s biggest challenge on the employment front is to provide jobs that yield about Rs 2,00,000 a year to about 16 million unemployed in the middle class households,” CMIE said in its weekly labour market analysis.
CMIE has divided households into five income classes. At the bottom of the income pyramid are households that earn less than Rs 100,000 a year. The next group earns between Rs 100,000 and Rs.200,000 a year and is called the lower middle class. The third group of households earns between Rs 200,000 and Rs 500,000 a year and belong to the middle income class. The fourth earns between Rs 500,000 and Rs 1 million a year and could be classified as the upper middle class and the richest group of households earn more than Rs 1 million in a year.
Further, a little over a third of the unemployed reside in the lower middle income households that earn between Rs 1 lakh and Rs 2 lakh. These households accounted for about 45 per cent of all households and the share of this class in the total unemployed increased from 33% during September-December 2019 to 39.5% during May-August 2021 as a significant portion of this income group migrated to lower income groups during 2021-22.
According to CMIE, the poorest households accounted for 9.8% of all the households and only 3.2% of all the unemployed before the pandemic in 2019-20. However, in 2020-21 and the first half of 2021-22 they accounted for 16.6% of all households but still accounted for only 3.5% of all the unemployed.
The richer households, however, suffer the least pain of unemployment. They account for about 0.5% of all households and contain a similar proportion of all unemployed. Their average LPR at 46.3% is the highest among all income groups.
As per CMIE, their unemployment rate had shot up the most among all income groups but has since declined. It was over 15% during the first wave of the pandemic. But, in 2021, the rate averaged at 5.2%. The employment rate has been mostly over 40% but shot up to 45% during September-December 2021.
“However, even India’s best case employment rate at 45% is much worse than the world average of 54%,” it concluded.
FAQs
Citing its Consumer Pyramids Household Survey (CPHS) data, CMIE said the middle class households accounted for half of the total households and also half of the unemployed and the largest number of unemployed people while the average labour participation rate (LPR) of this group was 43% compared to the overall average ...
What is the unemployment rate in India according to CMIE? ›
Unemployment rate in India rose to 8.1 per cent in April 2024 from 7.4 per cent in March 2024, according to CMIE's Consumer Pyramids Household Survey. The unemployment rate increased in urban India as well as in rural India. Rural unemployment rate climbed to 7.8 per cent in April from 7.1 per cent in March.
How many people in India are middle-income group? ›
If using a higher income band — where a person is considered middle class if their daily income is approximately US$17–100 — 432 million Indians can be included in the middle class as of 2021, comprising 31 per cent of the population, up from 14 per cent in 2005.
Is India in middle income trap? ›
The middle-income trap
However, there are rising concerns that India's miracle growth may soon face a middle-income trap, akin to experiences in other middle-income countries in East Asia, which will stall future growth. Several fast-growing developing countries have faced a middle-income trap.
What percentage of the Indian population is unemployed? ›
As of March 2023, India's unemployment rate, according to the Centre for Monitoring Indian Economy (CMIE), stood at 8.11%. In urban areas, the unemployment rate was 7.93%, while in rural areas, it was slightly lower at 7.44%.
Which unemployment is highest in India? ›
Himachal Pradesh recorded the highest urban unemployment rate at 33.9%, followed by Rajasthan at 30.2% among the 15 to 29 age group during July-September 2023. According to PLFS by NSSO, female unemployment in Himachal Pradesh reached 49.2%, while Rajasthan showed 39.4%, both higher than male unemployment rates.
Why rate of unemployment is very high in India? ›
"The Indian economy has not been able to create enough remunerative jobs in the non-farm sectors for new educated youth labor force entrants, which is reflected in the high and increasing unemployment rate."
Is India a poor or middle income country? ›
India is the largest lower-middle-income country, accounting for almost 18% of the world's population. How it performs in moving towards this goal will have a significant impact on achieving UHC at a global level.
What is middle-class income in India? ›
In India, the middle-income group is defined as households with an annual income between INR 7.5 lakh and INR 15 lakh. According to a recent report by the National Statistical Office (NSO), the per capita income in India in 2020-21 was INR 1,27,768.
How much income is considered rich in India? ›
A household with an annual income of more than ₹30 lakh is categorised as rich by the study. While a middle-class household earns between ₹5 lakh and ₹30 lakh, aspirers make somewhere between ₹1.25 and ₹5 lakh. The destitute make less than ₹1.25 lakh a year.
This group in India grew 6.3% per year between 1995 and 2021, according to a report by the People Research on India's Consumer Economy (PRICE). The middle class now represents 31% of India's population. It is projected to hit 38% by 2031 and 60% by 2047.
How bad is income inequality in India? ›
By 2022-23, top 1% income and wealth shares (22.6% and 40.1%) are at their highest historical levels and India's top 1% income share is among the very highest in the world, higher than even South Africa, Brazil and US.
What is the net worth of a middle class family in India? ›
At the other end of the spectrum is the 'Indian middle class' that has earnings of over Rs 2.5-lakh per annum and a net worth of less than Rs 7 crore. “It is estimated that around 56400,000 families in India fall under this category,” findings of the Hurun India Wealth Report 2020 suggest.
What is the main reason for unemployment in India? ›
What are main causes of unemployment? The main causes of unemployment in India are the caste system, inadequate economic growth, increase in population, agriculture as a seasonal occupation, loss of small-scale industries, and so forth.
Why most of the people in India are unemployed? ›
The figures suggest that the Indian economy has been unable to create enough remunerative jobs in the non-farm sectors for new educated youth labour force entrants. The high and increasing unemployment rate reflect the tragic trend.
What is the jobless situation in India? ›
According to the International Labour Organization's (ILO) India Employment Report 2024, youth (15-29) unemployment rate has been rising over the past several decades: from 5.6 per cent in 2000 to 6.2 per cent in 2012, and then increasing threefold, to nearly 18 per cent in 2019, and then dropping to around 15.1 per ...
What is India's official unemployment rate? ›
Periodic Labour Force Survey data showed the unemployment rate which stood at 3.4% in 2013-14 was only marginally lower at 3.2% in 2022-23. According to the Centre for Monitoring Indian Economy, an economic think tank, the unemployment rate was 7.6% in March.
What is the current unemployment rate in India in 2024? ›
India's urban unemployment rate in the quarter ended March 2024 was 6.7%, according to data released by the National Sample Survey Office (NSSO) on Wednesday.
Which country has the highest unemployment rate? ›
The world's five highest unemployment rates at the end of 2022 (latest information) were in Africa and occupied Palestine.
- South Africa: 29.8%
- Djibouti: 27.9%
- West Bank and Gaza: 25.7%
- Eswatini: 24.4%
- Republic of Congo: 21.8%1.
Unemployment Rate Formula and Equation
The unemployment rate formula is unemployment rate = (Number of unemployed individuals /sums of employed and unemployed individuals) x 100%. Example-Assuming the number of unemployed people is 500 and those employed are 3000, the unemployment rate will be: 500/3500 x 100% =14.29%.
