India's unemployment rate has reached a historic low

There is surge in self-entrepreneurship and higher education

Unemployment rate dropped from 6.1% in FY18 to 3.2% in FY23

SBI Research has reported that India’s unemployment rate has reached a historic low due to a surge in self-entrepreneurship across various levels, coupled with a greater emphasis on higher education.

The transformation in India’s labour market is characterized by an increasing number of individuals choosing entrepreneurship, facilitated by advanced education, as highlighted in the report.

The sixth annual Periodic Labour Force Survey (PLFS) report from the National Sample Survey Office further substantiates this trend, indicating a substantial drop in the unemployment rate from 6.1% in FY18 to 3.2% in FY23.

Concurrently, the Labor Force Participation Rate has risen from 36.9% to 42.4%, with a noteworthy surge in Female Labor Force Participation Rate surpassing the overall increase.

The upswing in self-entrepreneurship is attributed to a growing presence of household helpers, with government initiatives like Mudra Yojana and providing small credit to vendors playing a pivotal role in formalizing credit structures at the grassroots level.

Addressing concerns about youth unemployment, the report suggests that the observed decline in unemployment is indicative of a shift in the employment-education dynamic.

It notes that individuals, both men and women, are now staying within the education system until the age of 23-24, compared to the earlier norm of up to 17 years. This alteration in the education trajectory is seen as a key factor contributing to the changing employment landscape.