Indian Unemployment Data Inaccurate, Warn Independent Economists
New Delhi: Over 70% of economists polled by Reuters have called India’s unemployment data inaccurate and given estimates that were much higher than the official figures presented by the Indian government.
Of the 50 economists polled by the news agency last month, 37 said that the official unemployment rate, at 5.6% in June, is incorrect, while 17 estimated the unemployment rate to be anywhere between 7-35%.
The Periodic Labour Force Survey (PLFS), which records unemployment data, counts anyone who has worked for even an hour per week as employed. According to experts, outdated definitions of what is considered employment is among the reasons behind distorted figures.
"The whole thing to me is really throwing dust in your eyes. You say this is the unemployment rate, the growth rate – quite often, they don't make much sense. We have a massive employment problem and that is not reflected in the data," Pranab Bardhan, professor emeritus of economics at the University of California, Berkeley told Reuters.
"Most Indian workers are underemployed. If you are able-bodied and you did not work for any time, not even one hour in the last six months, unless you are rich, how did you feed yourself?... So you scrounge around and do something. And then you are employed. Now what does that employment mean?" asked Bardhan.
The Ministry of Statistics and Programme Implementation has defended the veracity of the PLFS, saying that international agencies used its data in their reports.
However, experts have argued against the methodology adopted by the Indian government. In the past, Indian estimates have included unpaid family labour and subsistence work as employment. This, experts say, goes against international norms and makes India data incomparable with other countries.
"Unemployment is one of our big challenges and I don't believe the government data reflects the true ground situation," said Duvvuri Subbarao, Reserve Bank of India Governor from 2008-2013.
The former governor also pointed to the type of employment being generated. He called for an increased focus on manufacturing, which holds the key to large-scale employment, unlike finance and IT that are less labour-intensive sectors.
While a quarter of experts polled had no problem with the accuracy of official jobless data, others said that even if the data was methodologically sound, it fails to capture the real challenges on the unemployment front.
Top banks' hiring lull
While India is said to be the world's fastest-growing major economy, the growth has not translated to employment generation for new entrants in the workforce.
According to data from annual reports of top private and public banks, hiring fell significantly in 2024-25.
HDFC Bank, India’s largest private-sector bank, hired 49,713 professionals in FY25, against 89,115 the previous year, and over 85,000 in FY23, the Business Standard reported.
State Bank of India (SBI), the country's largest lender, hired just 1,770 in FY25, compared with 10,661 in FY24, and 8,595 in FY23 and Axis Bank, the third-largest private-sector lender, hired 31,674 in FY25, against 40,724 the previous year, the report said.
"Growth in areas like personal loans, home loans, auto loans, and gold loans has been muted, so banks have been cautious about adding new feet on the street. Most of the hiring has been just backfilling, not expansion," Kartik Narayan, chief executive officer, staffing, Teamlease Services Ltd, told the paper.
The Union Ministry of Labour and Employment on Wednesday (July 23) released a statement saying that the Reuters article "suffers from a lack of statistical foundation and relies on unverifiable perceptions rather than data-driven evidence." The government said that the poll presented "a sceptical narrative regarding the accuracy of India’s official unemployment statistics, primarily relying on a perception-based survey of around 50 unnamed economists."
The government in its statement further claimed that state of employment in India "is one of forward momentum, not decline" and that this is backed by "robust, credible, and internationally accepted official data.".
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