INDIA UNEMPLOYMENT RATE

India unemployment rate stands at 7.32 percent of the labor force. The labour force is defined as the number of people employed plus the number unemployed but seeking work. The nonlabour force includes those who are not looking for work, those who are institutionalised and those serving in the military. India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Services are the major source of economic growth, accounting for more than half of India's output with less than one third of its labor force. The economy has posted an average growth rate of more than 7% in the decade since 1997, reducing poverty by about 10 percentage points. This page includes: India Unemployment Rate chart, historical data, forecast and news.

What is the relationship between inflation and unemployment? There has been an inverse relation between rate of inflation and the rate of unemployment in an economy. The more the entrepreneur extends the employment opportunity the more he has to pay to that particular factor of production and the more payment to factor of production the increase in the cost of producing a unit will be observed and in order to maintain the profitability of the product the entrepreneur will inflate the price of that product. A similar process will be observed through out the economy when the government intends to create job. The price of products or services, where the workforce is installed, will increase hence an increase in the rate of inflation will be visible through out the economy. It can be concluded from the aforesaid explanation that when a government intend to lower down the rate of unemployment it had to bear the increase rate of inflation in the national economy. Inflation and unemployment go hand in hand. For every country, maintaining a low unemployment rate is the main objective. It is usually believed that inflation and unemployment are inversely proportional. There are many economists, who hold the opinion that low rate of unemployment together with low inflation rate may be a source of concern. Both low inflation rate and low unemployment rate, may be hypothetical. In real practice, this rarely happens. If a particular country, has full employment, it can be said to have minimum rate of unemployment. If a nation maintains a minimum rate of unemployment in a condition when inflation rate is stable, it is said to follow the natural rate of unemployment. In other words, the natural rate of unemployment is the minimum rate of unemployment, which can be sustained

Inflation and unemployment- how it works:

If rate of inflation increases suddenly, it temporarily reduces, the rate of increase in the wages. Consequently, unemployment rate decreases. If the workers are able to cope with the increase in inflation, unemployment rate is also less. However, when they do realize that in order to compensate for the increase in price of commodities, the wages ought to be increased, unemployment may rise to a considerable extent. This increase in the demand of wages, has a tendency to reverse the unemployment curve to some extent (unemployment rises). If the rate of

inflation is very high, it does not mean that, there will be a permanent decrease in the rate of unemployment. As a rule, rate of inflation and unemployment adjust themselves to attain the equilibrium state, which is known as the natural rate of unemployment state, effortlessly. It just happens.

The Philips Curve:

The Philips Curve, as the name suggests is named after the William Philips, who was a famous economist. He suggested the relationship between inflation and unemployment. The Philips curve shows how inflation and unemployment are related. He suggested that if rate of inflation is high, rate of unemployment is low. On the other hand, if the rate of inflation is low, unemployment rate is high.

Year Inflation rate (consumer prices) (%) 2000 6.7 2001 5.4 2002 5.4 2003 5.4 2004 3.8 2005 4.2 2006 4.2 2007 5.3 2008 6.4 2009 8.3 Year Unemployment rate (%) 2002 8.8 2003 8.8 2004 9.5 2005 9.2 2006 8.9 2007 7.8 2008 7.2 2009 6.8 Year GDP (purchasing power parity) (Billion $) 2000 1805 2001 2200 2002 2660 2003 2660

2004 2005 2006 2007 2008 2009

3033 3319 3666 4156 2966 2816

Year GDP - per capita (PPP) (US$) 2000 1800 2001 2200 2002 2540 2003 2540 2004 2900 2005 3100 2006 3400 2007 3800 2008 2600 2009 2500

Year Inflation, average consumer prices Percent Change

198 0 198 1 198 2 198 3 198

11.365

13.115

15.40 %

7.887

-39.86 %

11.869 8.322

50.49 % -29.88 %

4 198 5 198 6 198 7 198 8 198 9 199 0 199 1 199 2 199 3 199 4 199 5 199 6 199 7 199 5.556 -33.24 %

8.731

57.15 %

8.799

0.78 %

9.385

6.66 %

6.159

-34.37 %

8.971

45.66 %

13.87

54.61 %

11.788

-15.01 %

6.362

-46.03 %

10.212

60.52 %

10.225

0.13 %

8.977

-12.21 %

7.164 13.231

-20.20 % 84.69 %

8 199 9 200 0 200 1 200 2 200 3 200 4 200 5 200 6 200 7 200 8 200 9 4.67 -64.70 %

4.009

-14.15 %

3.779

-5.74 %

4.297

13.71 %

3.806

-11.43 %

3.767

-1.02 %

4.246

12.72 %

6.177

45.48 %

6.372

3.16 %

8.349

31.03 %

8.664

3.77 %