India's unemployment rate dropped drastically to 6.43% in September. Data released by the Centre for Monitoring Indian Economy last week shows that rate of unemployment fell both in rural and urban areas, with rural unemployment witnessing 5.84% drop in September from 7.68% in August while in urban areas unemployment decreased to 7.7% against 9.57% in the previous month. Sounds encouraging.

The data, however, shows that urban employment is substantially higher than rural unemployment in both August and September, and this can be considered as a reflection of a deteriorating urban employment scenario in the country, particularly in the background of the Covid pandemic. Rising food and fuel prices have added to the woes of the urban workers, particularly the low-skilled workers. This challenge needs to be addressed.

Rajasthan recently launched an Urban Employment Scheme, bringing forth the debate whether the Centre should launch a similar scheme at the national level. The suggestion had already been put forward by the PM’s Economic Advisory Council and considering the fact that a total of 42,004 suicides – 26% of total suicides in the country – were committed by daily wage earners in 2021, the suggestion definitely seems worth considering.

Meanwhile, as expected, the RBI last week increased the repo rate by 50 basis points, in order to rein in inflation and also considering the bleak global economic outlook and tightening financial condition. The central bank cut the real GDP forecast to 7%and retained the inflation projection at 6.7% for 2022-23, adding that inflation will come down to 4% in two years.

I invite your opinions.