Centre says Citigroup report on India employment fails to consider positive trends, comprehensive data from official sources; catch key takeaways from Labour Ministry's rebuttal

The central government said on Monday that a research report by Citigroup, forecasting that India "will struggle to create sufficient employment opportunities" even with a 7 per cent growth rate, fails to consider the positive trends and comprehensive data from official sources. In a strong rebuttal to the report by US-based Citigroup, the Ministry of Labour & Employment said that the government remains committed to creating a robust and inclusive job market, with evidence pointing to substantial progress being made in this direction, and that such reports "do not analyse all official data sources available in the public domain".

Official data sources like the PLFS, the RBI and the EPFO show consistent improvements in the key labour market indicators and a declining unemployment rate in the past five years while EPFO and NPS data "further support the positive employment trends", it said.

Citing the RBI's KLEMS data, the ministry highlighted that more than eight crore employment opportunities were created from 2017-18 to 2021-22, translating to an average of more than two crore per year. And that came despite the world economy being hit by COVID-19 pandemic during 2020-21, "which contradicts Citigroup’s assertion of India’s inability to generate sufficient employment. This significant employment creation demonstrates the effectiveness of various government initiatives aimed at boosting employment across sectors," according to the Labour Ministry. 

Citing data from the annual PLFS report, the ministry said that Worker Population Ratio (WPR) - a measure of employment - increased from 46.8 per cent in 2017-18 to 56 per cent in 2022-23, while the labour force participation increased from 49.8 per cent to 57.9 per cent. At the same time, the Unemployment Rate declined from 6.0 per cent in 2017-18 to a low of 3.2 per cent in 2022-23. 

The data depicts an improving trend in labour market indicators related to Labour Force Participation Rate (LFPR), Worker Population Ratio and Unemployment Rate for individuals above 15 years old and above during the five-year period, it said. 

The data suggests that during the five-year period, "more employment opportunities have been generated compared to the number of people joining the labour force, resulting in a consistent reduction in the unemployment rate. This is a clear indicator of the positive impact of government policies on employment. Contrary to the report, which suggests a dire employment scenario, the official data reveals a more optimistic picture of the Indian job market," the Labour Ministry said. 

It also stated that more than 6.2 crore net subscribers were added to retirement fund body EPFO between September 2017 and March 2024, while there was a substantial increase in the NPS subscriber base. Also, during 2023-24, more than 1.3 crore subscribers joined EPFO, which was more than double compared to 61.12 lakh in 2018-19, it said.

Citing National Pension System (NPS) data, the ministry said that more than 7.75 lakh new subscribers joined the scheme during 2023-24 under the central and state governments, which was 30 per cent more than 5.94 lakh new subscribers in 2022-23. "This substantial increase in new subscribers highlights the government's proactive measures to fill up the vacancies in public sector in a timely manner," it said. 

Stating that the future prospects of the employment market in India are highly encouraging, "as evidenced by data from various sources", the Labour Ministry said that the Global Capability Centers (GCCs) in the country have shown remarkable growth in recent years.

"It is well known that the private data sources, which the report/media refers to as more reliable, have several shortcomings. These surveys use their own derived definition of employment – unemployment which is not aligned to either national or international standards. The sample distribution and methodology are often critiqued for not being as robust or representative as official data sources like PLFS. Therefore, reliance on such private data sources over official statistics can lead to misleading conclusions and thus, should be used with caution," it added. 

The rebuttal by the central government comes days before the scheduled presentation of the Narendra Modi 3.0 administration's Budget for the current financial year later this month.