Is the Country's Economy Addressing Unemployment Effectively?

Unemployment discussions are incomplete without reviewing LFPR. In India, despite rising LFPR, job opportunities are growing.
The discussion on un

Source: aajtak

By the end of 2025, India is set to become the world's fourth-largest economy. But is the nation managing its unemployment problem effectively? The International Monetary Fund's (IMF) April 2025 World Economic Outlook

report

reveals that India's economy is progressing rapidly, reducing unemployment. Furthermore, India outpaces countries like Brazil, China, Canada, Italy, and France in this regard.

India's GDP Position
Economic outlook in India highlighting labor force participation and employment.

Source: aajtak

Unemployment in India

With a population of 1.44 billion, the world's most populous nation, India, is continuously reducing its unemployment rate. From 8.9% in 2018, the rate dropped to 4.9% in 2024. Notably, IMF's projections align with data from the Ministry of Statistics and Programme Implementation's Periodic Labour Force Survey (PLFS).

The conversation on unemployment isn't complete without considering the Labor Force Participation Rate (LFPR). If people stop seeking jobs, the unemployment rate decreases on its own. However, in India's case, this isn't true. India's LFPR is rising, indicating more people are entering the job market and finding employment. This rate increased from 48.4% in 2018 to 56.4% in 2024.

Unemployment Rate and LFPR
Comparative analysis of unemployment rates globally, focusing on India's position.

Source: aajtak

With improving employment conditions, India surpasses several of its counterparts. While India's unemployment rate stands at 4.9%, South Africa's is at 32.8%, Spain's at 11.4%, Turkey's at 8.7%, France's at 7.4%, Brazil's at 6.9%, Canada's at 6.4%, and China's at 5.1%.

Global Unemployment Map
World unemployment rate breakdown, with India's metrics highlighted.

Source: aajtak

Meanwhile, the government identifies Micro, Small, and Medium Enterprises (MSME) as the primary source of employment, enhancing their support in recent central budgets. The MSME Ministry stated after this year's central budget that

beyond their economic contributions, these MSMEs have provided jobs to over 251.8 million people. Such massive job creation highlights the sector's role in economic growth and social stability.

The MSME ministry's budget allocation increased from 7,011 crores in the fiscal year 2020 to 17,307 crores in 2025.

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