Whither Make in India? Unemployment surges despite India’s economic ranking boost claim

By Rajiv Shah

India’s rising unemployment continues to cast a shadow over its much-touted economic ascent, with official data revealing that the jobless rate climbed to 5.6% in May 2025 from 5.1% the previous month. The worrying uptick comes even as the government celebrates India’s emergence as the world’s third-largest economy, the advocacy group Centre for Financial Accountability (CFA) has said in an analysis.

Youth unemployment jumped to 15%, disproportionately impacting the 15–29 age group. Women, especially in rural areas, face sharper setbacks, with female labour force participation declining to 36.9% and their employment ratio falling to just 31.3%. The government attributed these shifts to academic and seasonal factors, though analysts point to structural flaws in the labour market.

Unemployment in rural India rose to 13.7%, while urban centres recorded a concerning 17.9%. Simultaneously, the overall labour force participation rate fell from 55.6% to 54.8%, indicating a growing number of people disengaging from the job hunt entirely.

Adding to economic unease, India’s merchandise exports contracted by 2.17% in May even as imports—particularly from China—continued to surge. Domestic car sales, a bellwether of consumer confidence, also dipped 0.8% year-on-year.

While headline GDP figures paint a picture of economic strength, experts warn of a disconnect between growth and ground realities. “Economic growth on paper is not translating into jobs on the ground,” said CFA. “Despite big claims around ‘Make in India’ or the digital economy, the numbers show a shrinking job market.”

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