India's unemployment rate has shown a positive trend, dropping to 5.2% in the July-September quarter of fiscal year 2025-26, according to the Periodic Labour Force Survey (PLFS) data released by the National Statistics Office (NSO). This marks a decrease from 5.4% in the preceding quarter (April-June). The improvement in the job market is attributed to increased employment in rural areas, particularly during the monsoon season, and a rise in female participation in the workforce.
The data indicates a divergence between rural and urban areas. The unemployment rate in rural India fell to 4.4% from 4.8% in the previous quarter, driven by seasonal agricultural employment. This reflects the cyclical nature of the rural job market, where farming activities linked to the monsoon season boost short-term job opportunities. In contrast, urban unemployment saw a slight increase, rising to 6.9% from 6.8%. This uptick suggests continued pressure on non-agricultural and manufacturing sectors in urban areas, which are still recovering from the post-pandemic economic slowdown.
Despite the overall positive trend, certain areas of concern remain. Youth unemployment (ages 15–29) edged up from 14.6% to 14.8%, highlighting the need for more job opportunities for new entrants in the labor market. The survey, which collected data from 564,828 individuals, estimated that there were 562 million employed persons in the quarter. The labor force participation rate (LFPR), which is the percentage of people working or seeking work, experienced a marginal increase from 55.0% to 55.1%. This rise was supported by greater female participation in both rural and urban labor markets. The female participation rate climbed to 33.7% from 33.4%, indicating a continued, albeit modest, upward trend in women's involvement in the workforce. However, the unemployment rate among women in urban areas increased to 9% from 8.9%, while for men it rose to 6.2% from 6.1%.
The share of self-employed workers in rural areas increased from 60.7% to 62.8%, which is reflective of seasonal farm activity. Salaried employment in urban areas saw a modest improvement, rising to 49.8% from 49.4%. Salaried jobs are generally considered more secure than casual labor or self-employment because of the social security benefits and consistent income they provide. The survey also revealed that 57.7% of the rural workforce was employed in agriculture during the quarter, compared to 53.5% in the previous quarter.
In summary, while India's unemployment rate has decreased, driven by rural employment and increased female participation, challenges persist in urban areas and among young people. The labor market's recovery is still uneven, and sustained efforts are needed to create more stable, high-quality jobs, particularly in urban sectors, to ensure long-term economic growth and stability.
