4 min readMar 12, 2026 06:32 AM IST
First published on: Mar 12, 2026 at 06:32 AM IST
Seldom does the release of official statistics on the economy receive such attention as did the announcement of a new GDP series on February 27. The data have been interpreted as encouraging for the government. The growth rate for the last full year for which data are available, i.e., 2024-25, has been revised upwards a notch, while the growth rate for the previous year, i.e., 2023-24, has been revised downwards substantially. However, for those promoting the “India growth story” this downward revision changes nothing as India remains the “fastest-growing major economy” in the world.
As one of us showed in a 1994 article with Kesavan Pushpangadan, the “double-deflation” method of estimating GDP — the principal innovation in the latest estimates — is a powerful approach. Yet, as economists we find the focus on production, which is what GDP captures, out of all proportion. Unemployment should be given as much importance as GDP or inflation in an assessment of the state of the economy. If we choose to look at the unemployment data, the picture looks far less rosy than that for either of these indicators. For the 10 months before January 2026, the unemployment rate (current weekly status) has averaged 5.2 per cent. In the first year prior to 2014 for which National Sample Survey (NSS) estimates are available, i.e., 2011-12, it was 3.7 per cent. 2011 would be an appropriate benchmark year as the effects of both the global financial crisis of 2008 and the Mukherjee Stimulus, named for the then finance minister, may be expected to have subsided. What is notable is that the unemployment rate has been higher every year since 2011, even if it has been falling of late. These figures are for the population as a whole. When we focus on youth unemployment, i.e., the unemployed in the cohort 15 to 29 years, the pattern is the same. The youth unemployment rate (usual status) in 2011-12 was 7.7 per cent and in 2023-24 it was 10.2 per cent. The economic policies of the Narendra Modi-led governments have thus far not succeeded in lowering the unemployment rate to the level it had inherited.
The unemployment rate does not figure commensurately in the official pronouncements on the economy made from time to time. The latest Economic Survey speaks of policies “pushing the growth frontier” and having “tamed and anchored” inflation. The statement on inflation is contestable. While it is true that inflation right now is at its lowest in a decade and a half, what lowered it is open to question. Econometric investigation reveals no role in this outcome for monetary policy, the RBI’s raison d’être. On the other hand, it reveals a definite role for agricultural prices, notably food, in determining the path of inflation. Food price inflation moves according to variation in the growth of agriculture. The just-released GDP data estimate agricultural growth to have been an extraordinarily high 4.2 per cent in 2024-25. So, it is not surprising that food inflation is down. It is just that we do not have a sufficiently clear idea whether its most recent record is due to policy intervention or a benign turn by nature. But what can be asserted is that the Economic Survey does not treat inflation and unemployment equally. It has presented data on inflation from 2011 onward, serving to draw attention to its decline since but does not afford similar treatment to the data on unemployment. Had the data on the unemployment rate been presented for the same period, the fact that unemployment today is high by historic standards would have become apparent.
Economic policy must now pivot towards jobs. However, even as employment generation is given more attention, a scrutiny of the methodology of measuring unemployment needs to be done. A puzzle presents itself when viewing the time series on the unemployment rate according to the Periodic Labour Force Survey. India’s experience comes across as unique in that the unemployment rate declined during the Covid year of 2020-21 when output contracted by close to 7 per cent. In the United States, for instance, unemployment had surged during the pandemic, though the economy contracted far less. An explanation of the Indian case by the NSSO would help create greater confidence in the unemployment data.
Balakrishnan is honorary visiting professor, Centre for Development Studies, Thiruvananthapuram. Sule is teaching fellow, Krea University, Sri City
