The ruling Bharatiya Janata Party is likely to come back to power for a third time in Haryana. Meanwhile, the Jammu and Kashmir results are indicating a clear victory for the Congress-National Conference alliance, even though the BJP has done considerably well in the valley.
It’s important in such trend analyses of electoral data to separate the vote-share percentage from the actual seat-share won by parties. For example, while Congress may have a larger vote share in Haryana (versus BJP), the incumbent party may still get a higher seat share to remain in power.
These results may or may not have a clear bearing on Maharashtra and Jharkhand, but what’s clear is how the mapping of core issues on which people vote and what they experience it continue to lead to a churn of events which require deeper ground analysis. This is even more important, given how exit polls have probably got Haryana wrong.
Beyond regional politics and what’s likely to happen in these three states and one Union territory, next year’s elections in Bihar will also have a strong bearing on explaining the status-quo of the popular mandate. BJP is still the dominant electoral party, despite the 2024 Lok Sabha results.
At a state level, there is a call for change despite the absence of a better, more suitable alternative in some areas. A common thread in this silent discontent articulated in earlier Lok Sabha and now during assembly polls is the BJP government’s poor track record in creating jobs for those existing or entering the working population.
It also lacks in handling food inflation. Despite a weak economic governance record, the party is continuing to establish dominance in its electoral standing – a third term victory for the BJP in Haryana will reflect faith in the incumbent party which still can win maximum seats, even if it lags in popular vote share.
Still, economic issues matter and have their own bearing on party performance over time.
The growing inflationary tax has been wrecking household budgets beyond an erroneously high indirect-tax ratio (driven by the imperfections of an extractive GST revenue system) which adversely impacts middle-and low-income households. Here, it is pertinent to bring forth insights from what appears to be a disjointed, unorganised and highly informal employment landscape that needs structural interventions from the nation-state and long-term planning.
India’s disjointed labour-markets continue to grapple with the structural challenge of unemployment-underemployment, a critical issue highlighted in the Annual Report on the Periodic Labour Force Survey (PLFS) 2023-24.
The report offers an in-depth look at the state of employment, labour force participation, and the contrasting dynamics between farm and non-farm employment. It sheds light on the broader health of India’s labour market, revealing a complex interplay of rural and urban trends, gender disparities, and the persistent struggle of the country’s youth to secure stable employment.
More workers seeking employment are turning back to the agricultural sector, working as casual or unpaid workers, in the absence of jobs across urban areas. This might indicate jobs being created in rural areas but what’s happening is a mass reverse trend in people going back to rural areas to work in underpaid, more exploitative agri-space, instead of working in more organised and formal jobs including in manufacturing, industry or construction. This is widening existing informality and inequality amongst workers.
In PLFS 2023-24 data, the unemployment rate for individuals aged 15 years and above in the usual status stands at 3.2%. While this figure may seem relatively low, a closer examination uncovers significant differences between rural and urban areas. In rural India, the unemployment rate for males is 2.7%, whereas urban males face a higher rate of 4.4%.
The contrast is more pronounced for women and the youth.
In rural regions, female unemployment is just 2.1%, while urban centres report a much higher 7.1%. This urban-rural divide highlights a critical challenge: urban economies, despite their greater access to non-farm jobs, are struggling to create sufficient employment opportunities for women. For men, rural areas, dominated by farm employment, offer more opportunities, albeit in lower productivity and often underemployment settings.
The labor force participation rate (LFPR) in India paints an equally nuanced picture. For individuals aged 15 and above, the LFPR stands at 60.1%, with rural areas reporting a higher participation rate of 63.7%, compared to just 52.0% in urban regions. This disparity reflects the continued dominance of agriculture in rural employment.
Agriculture has long served as a key source of jobs, particularly for rural populations, but the sector’s productivity and potential for economic growth remain limited. This high rural participation is driven by necessity rather than opportunity, with much of the workforce engaged in small-scale subsistence farming.
The seasonal nature of agricultural work often leaves workers underemployed during non-harvest periods, contributing to rural labour market volatility. Farm employment, while providing a safety net for many rural households, often translates to lower income levels and fewer opportunities for skill development.
A significant revelation from the report is the continuance of stark gender disparity in both labour force participation and unemployment. Rural women, with an LFPR of 47.6%, are more engaged in the labour market compared to their urban counterparts, where the LFPR drops to 28%.
This difference reflects the cultural and economic barriers that prevent women from accessing formal sector jobs in cities. In rural areas, women are predominantly self-employed in agriculture, but this does not necessarily translate to better income or job security.
The exploitative self-employment nature of rural women’s work, primarily in small-scale farming, limits their participation in more diversified and higher-paying sectors. Access to resources such as credit, land, and market linkages remains limited for women, further entrenching their roles in low-productivity agricultural activities.
Also read: Why Women’s Employment Is a Conundrum in India
Another concerning trend highlighted in the report is the uncomfortably high rate of youth unemployment, especially in urban areas. For individuals aged 15 to 29 years, unemployment rate stands at 10.2%. The rural-urban divide is stark in this demographic as well. Rural male youth-unemployment is 8.7%, while in urban areas, it rises to 12.8%.
For women, rural female youth unemployment is at 8.2% and a striking 20.1% in urban areas. This high rate of urban female youth-unemployment underscores the mismatch between the education system and the job market. As more young people pursue formal education, particularly in urban areas, the job market has not kept pace in creating opportunities that match their qualifications. Many young women find themselves overeducated and underemployed, struggling to find jobs that meet their skill levels.
Despite these challenges, the report also highlights gradual improvements in labour force participation. In past year, LFPR has seen a slight increase, in rural areas, where the participation of rural males rose to 63.7%. This could be attributed to government initiatives aimed at improving rural employment through self-employment schemes and the promotion of rural industries. Programmes like Atmanirbhar Bharat and Pradhan Mantri Mudra Yojana have sought to encourage entrepreneurship and boost job creation, particularly in non-farm sectors. However, the success of these initiatives remains suboptimal at best.
The report also touches on the persistent issue of underemployment in India’s labor market. The worker population ratio (WPR) for individuals aged 15 and above saw a slight rise to 57.1% in 2023-24, up from 56.0% the previous year.
However, this increase does not necessarily indicate full employment. The rise in rural areas can be attributed to agricultural work, where underemployment remains widespread. Seasonal fluctuations in farm work mean that many rural workers are only partially employed for much of the year, contributing to a labour market that is characterised more by subsistence than productive-growth-oriented employment. For women, particularly in rural areas, the WPR also remains low, reflecting the broader issue of underemployment in the agricultural sector.
Youth unemployment remains more acute in urban areas, where young people, especially women, are struggling to find meaningful work. This is not just a reflection of limited job creation but also a sign of the growing disconnects between skills imparted by education system and the industrial needs of the job market. The report highlights the need for better vocational training and education reform to bridge this gap and ensure that young people, particularly in urban areas, are better prepared for the jobs available in the market.
The reliance on agriculture in rural areas limits opportunities for diversification and income growth, while urban areas, despite offering more non-farm employment opportunities, are struggling to provide jobs for women and young people.
Addressing these issues will require a concerted effort to create more inclusive and dynamic labour markets, ensuring that economic growth benefits all segments of the population. There is a lot more that government intervention can do to correct these structural imbalances, provided there is an explicit will to do so. For now, given how despite core economic issues, an incumbent is winning a third term in one state (Haryana) and is clearly gaining in strength in another (Jammu and Kashmir), credit has to be given to the party cadre and booth workers who helped mobilise electoral strength in favour of the BJP.
Deepanshu Mohan is a Professor of Economics, Dean, IDEAS, and Director, Centre for New Economics Studies. He is a Visiting Professor at London School of Economics and an Academic Visiting Fellow to AMES, University of Oxford.
