Households in both urban and rural areas reeling under unprecedented unemployment and debt crisis

Data released by National Statistics Office shows that the situation was already bleak even before the COVID-19 pandemic struck the country, which only further exacerbated the crisis

Representative Image (Photo Courtesy: Social Media)
Representative Image (Photo Courtesy: Social Media)
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Dr Gyan Pathak

All indicators point to an unprecedented unemployment and debt crisis in India, both in urban and rural areas. Households are reeling under the crisis that has been crippling their growth and wellbeing. The latest data sets for unemployment and debts, released by National Statistics Office (NSO), show that the situation was already bleak even before the COVID-19 pandemic struck the country, which only further exacerbated the crisis.

The Quarterly Periodic Labour Force Survey (PLFS), which provides estimates of labour force indicators, has recorded urban employment at 10.3 per cent during October – December 2020. The other NSO data has revealed that household debt in 2019 for rural areas was Rs 60,000 and for cities it was Rs 1.2 lakh. Since the COVID-19 crisis and subsequent lockdowns and containment measures had devastating effects on the economy and the well-being of the people, the crisis has obviously worsened.

It should be kept in mind that only annual reports of PLFS cover both urban and rural areas, but the quarterly bulletins cover only urban areas as indicators for labour force, such as Worker Population Ratio (WPR), Labour Force Participation Rate (LFPR), Unemployment Rate (UR), distribution of workers by broad status in employment and industry of work in Current Weekly Status (CWS).

The unemployment rate in urban areas remained in double digits for the third consecutive quarter of 2020-21 at 10.3 per cent, as per the PLFS quarterly data. It was higher than 7.9 per cent of the corresponding period in 2019-20. During January-March 2020, it had worsened to reach 9.1 per cent. It suddenly rose to 20.9 per cent during April-June 2020 after the general lockdown was announced on March 24. During July-September it was 13.3 per cent.

The worst affected workforce was between 15-29 years of age. The unemployment rate among them was as high as 24.9 per cent during October – December 2020 as against 19.2 per cent in 2019 during the same period. Females suffered even more with unemployment rate of 32.9 per cent as against 22.6 per cent for males.

During January – March 2020, unemployment rose to 21 per cent which worsened further and reached at 34.7 per cent during April-June 2020. During July – September 2020, it was 27.7 per cent.

Unemployment rate for women was 13.1 per cent during October-December 2020 as against 9.5 per cent among men. These were 9.8 per cent and 7.3 per cent respectively for women and men a year ago.

Among the states, Jammu & Kashmir had the highest unemployment rate at 17.8 per cent during the quarter ending 2020. In Kerala, it was 16.7% and in Jharkhand 16%. Gujarat had the lowest unemployment rate among states at 4%, slower than 4.5% in the previous quarter.


Twelve states recorded double-digit unemployment rates during this period, compared with 22 states in the April-June quarter of 2020. Eight states had recorded double-digit unemployment in the October-December quarter of 2019-20.

The labour force participation rate during October-December 2020 was only 37.3 per cent, just 0.3 per cent higher than the previous quarter, and only 0.1 per cent more than a year ago. However, it was 37.5 per cent in January-March and 35.9 per cent in April-June 2020. Female labour participation was at 16.4 per cent as against males’ 57.4 per cent in the quarter ending 2020.

The Worker Population Ratio was as low as 33.5 per cent during October-December 2020, which was only 14.3 per cent among women and 52 per cent among men. It showed the hopelessness among labour force in finding jobs, and hence many have just stopped for searching jobs. One year before, the figures were 34.2, 15.0, and 52.6 per cent respectively. The most hopeless situation was for the workforce in the age group 15-29, which were 28.8, 12.1, and 44.4 per cent respectively.

The data regarding distribution of workers also presented a disturbing trend. Only 48.7 per cent were employed on regular wages or as salaried employees. Casual labours were 12.4 per cent, self-employed were 38.9 per cent, helper in household enterprise were 5.5 per cent, and 32.4 per cent were workers in their own account during the quarter ending 2020.

During the same period, only 6.1 per cent of workers were engaged in agriculture sector, as against 32.2 per cent in secondary, and 61.7 per cent in tertiary sector of the economy. One year before these figures were 5.1, 33.2, and 61.7 per cent.

Another survey data released by NSO for the year 2019, as part of NSS 77th round, revealed that the average household in rural areas had a debt of close to Rs 60,000 and in urban areas Rs 1.2 lakh. It has been found that percentage of indebtedness in rural and urban households were 35 and 22 per cent respectively. It means that rural households are in very bad condition compared to urban households. With employment conditions still remaining volatile, availability of fewer jobs and high unemployment rate has further exacerbated their situation.

The breakup of indebtedness in the rural areas shows that the average debt for cultivator household was Rs 74,460. It was, however, Rs 40,432 for non-cultivator households. About 66% of the outstanding cash debt was from institutional credit agencies, but 34% was from non-institutional credit agencies. The average value of assets held by cultivator families was Rs 22 lakh and for non-cultivators it was about a third at Rs 7.8 lakh.

It clearly shows that our farmers’ condition has been worsening more than the non-farmer households, despite the promise made by Prime Minister Narendra Modi of ‘doubling farmers income by 2022’ which has obviously failed.

It also shows that access to institutions finance to rural populace is far worse than the urban, despite all claims of Modi government for financial inclusion through Central schemes.

About 84.4% of the population had a deposit account in banks in rural India (88.1% male and 80.7% female), not very different from the 85.2% in urban areas (89.0% male and 81.3% female).


In urban areas, self-employed households’ average debt was Rs 1.8 lakh and for other households it was Rs 99,353. Non-institutional lenders accounted for just 13% of the outstanding cash debt while 87% was from institutional credit agencies.

The average value of assets for self-employed households was at Rs 41.5 lakh which was almost twice as much as the average of Rs 22.1 lakh for other households. SCs had the lowest average value of assets at Rs 8.7 lakh in rural areas and Rs 13.2 lakh in urban areas.

(IPA Service)

Views are personal

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