Only 40% of Indians of legal working age were employed or were looking for jobs in 2021-22. In comparison, the labour force participation rate was above 46% in 2016-17, according to data from The Centre for Monitoring Indian Economy.
In absolute terms, India’s labour force has shrunk from about 445 million to 435 million in the six years. Currently, about 1,085 million Indians are aged 15 or above and can be legally employed.
Labour force participation among women, who were already a small part of the workforce, has declined further. In 2016-17, about 15% women were employed or looking for jobs. This metric dipped to 9.2% in 2021-22. Among men, the participation rate declined from more than 74% to 67%.
The reduction in the participation rate was higher in the urban areas than in the rural parts of the country. The rate slid from 44.7% to 37.5% in urban areas — a more than seven percentage point drop. Rural areas saw the figure dropped from 46.9% to 41.4%.
States-related analysis show that in 23 of the 24 States with data, the participation rate declined in March 2022 compared with March 2016. The rate dropped in all the States, except in Rajasthan. The drop was more pronounced among two southern States, which had a high participation rate, to start with.
Andhra Pradesh and Tamil Nadu, whose participation rates were 54% and 56% respectively in March 2016 — occupying the top two slots at the time — also witnessed the sharpest declines. Between 2016 and 2022, the participation rate fell by 20 percentage points and 17 percentage points for Tamil Nadu and Andhra Pradesh respectively — the sharpest declines among all States.