Govt rejects report claiming India’s real unemployment could be double: 'Perception-based survey'

The Ministry of Labour and Employment on Wednesday rejected criticism that official unemployment data understate the country’s joblessness and underemployment, describing a Reuters poll of independent economists as lacking “statistical foundation” and relying on “unverifiable perceptions”.

A Reuters survey published on Tuesday found that over 70% of 50 economists polled believe India’s official unemployment figures underestimate the true extent of joblessness. Some economists said the real rate could be around twice the official June estimate of 5.6%, pointing to outdated definitions of employment that count anyone working even one hour a week as employed.

The ministry, in a statement on Wednesday, said the Reuters article suffered from a “lack of statistical foundation” and relied on expert opinions without referencing any independent data-driven empirical analysis.

The official employment and unemployment estimates are derived from the Periodic Labour Force Survey (PLFS), conducted by the National Statistical Office using a large-scale, stratified, multi-stage random sampling framework covering rural and urban areas.

The ministry said the PLFS is internationally benchmarked, in line with International Labour Organization definitions, and widely used by global agencies including the World Bank and UNDP for Sustainable Development Goal reporting.

“While expert opinion can offer valuable insights, it cannot be a substitute for large-scale, representative, and methodologically robust surveys,” the ministry said.

According to official PLFS data, India’s unemployment rate fell sharply from 6% in 2017–18 to 3.2% in 2023–24, while labour force participation rose from 49.8% to 60.1% in the same period. The youth unemployment rate fell from 17.8% to 10.2%, below the global youth unemployment rate of 13.3%, the ministry said.

The government also cited an increase in total employment from 47.5 crore in 2017–18 to 64.33 crore in 2023–24. It pointed to the rising formal employment reflected in Employees’ Provident Fund Organisation (EPFO) net additions, which crossed 12.9 million in 2024–25.

"It is essential to recognise that perception-based polls, such as the one cited in the Reuters article, inherently involve subjective biases and cannot substitute systematically collected, statistically sound data," the official readout stated.

"The Reuters poll is based solely on the perceptions of a select group of economists, which, while offering viewpoints, are prone to personal bias and do not offer the methodological rigor or empirical depth of a national-level labour force survey," it added.

However, economists remain concerned that the official data do not capture underemployment or the quality of jobs created.

The Reuters report quoted several economists, including University of California’s Pranab Bardhan and University of Massachusetts’ Jayati Ghosh, who argued that the official data fails to capture widespread underemployment, stagnating wages, and the quality of jobs created in recent years despite high GDP growth.

Former RBI Governor Duvvuri Subbarao also said that unemployment remains one of India’s biggest challenges and that current data does not fully reflect the ground reality.

“Half of the workers are getting less than they got even 10 years ago. To me, these are not signs of a healthy economy,” Ghosh said.

Rebutting this claim, the ministry said that average daily wages for casual labourers increased from ₹294 in mid-2017 to ₹433 in mid-2024, while monthly earnings of regular salaried employees rose from ₹16,538 to ₹21,103 over the same period.

While about a quarter of economists polled said they had no issue with the PLFS accuracy, critics argue that counting unpaid family labour or subsistence activities as employment masks India’s employment challenge and makes international comparisons misleading.

“While constructive debate on methodologies is essential, it must be grounded in rigorous scientific principles and full disclosure—standards that are consistently upheld by the PLFS,” the ministry said.

The government said it continues to prioritise employment generation through schemes such as Skill India, Digital India, and its new ₹99,446 crore Employment Linked Incentive (ELI) Scheme.