The country's unemployment rate in July fell to 6.8%, the lowest level in the last six months, amid rising agriculture activity during the monsoon, according to data from the Centre for Monitoring Indian Economy (CMIE).
The unemployment rate dropped from 7.8% in June, the data showed.
Rural unemployment declined to 6.14% from 8.03% in June, CMIE said.
On the other hand, urban unemployment jumped to 8.21% in July from 7.8% in June as the number of jobs fell both in industry as well as in the services sector.
Employment in urban India fell by 0.6 million to 125.1 million, according to the data.
The month-on-month recovery in employment was partial as the fall in June was 13 million compared to the growth of only 6.3 million jobs in July, CMIE Managing Director and CEO Mahesh Vyas said.
The recovery was mainly in rural areas and in particular, in agriculture as the southwest monsoon progressed and kharif sowing activities picked up pace.
The agriculture sector in rural area absorbed an additional 9.4 million workforce in July, while it shed 8 million in June, Mr. Vyas added.
This lower-than-expected absorption of labour into agriculture in July reflects the patchy progress of the southwest monsoon and the correspondingly poor kharif sowing this year.
Rains so far this year have been very poor in Uttar Pradesh and Bihar, Mr. Vyas said, adding that data available till July-end showed that rice cultivation was down 13% mostly in Bihar, Uttar Pradesh and West Bengal.
"Unless the khariff sowing improves, we don't see improvement in rural employment. However, I expect the monsoon to improve going forward, which will have a positive impact on the employment scenario in rural areas," Mr. Vyas said.
He added that the industrial sector lost 0.2 million jobs in July after having lost 4.3 million during June, while the services sector lost 2.8 million jobs in July after having lost 0.8 million in June.
The industrial and services sectors have been losing jobs for two months, Vyas added.
In May, employment in the industrial sector had shot up to 108 million, but since then it has declined to 104 million in June and July, Vyas said.
The recovery in industrial jobs was essentially in the construction industry and not in manufacturing, which are of better quality, Mr. Vyas noted.
More than 8 million non-farm jobs were lost during June and July, equally both in the industry and services sectors.
"There is a need for more investments to take place, which is likely to take some time. However, we don't expect any drastic deterioration in the unemployment scenario in the country," Mr. Vyas added.
