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Unemployment rate declined in urban and rural India during Oct-Dec quarter

February 10, 2026 5 min read Economics Social Issues GS3 (Economics) GS1/GS2 (Social Issues)
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What Happened

  • The Periodic Labour Force Survey (PLFS) quarterly bulletin for October-December 2025 reported a decline in unemployment rates: rural unemployment fell to 4.0% (from 4.4% in July-September 2025) and urban unemployment declined to 6.7% (from 6.9% in the previous quarter) among persons aged 15 years and above.
  • The overall Labour Force Participation Rate (LFPR) rose to 55.8% during October-December 2025, up from 55.1% in the previous quarter.
  • Female LFPR maintained its upward momentum, increasing to 34.9% from 33.7% in the previous quarter, driven by a rise in rural female LFPR from 37.5% to 39.4%.
  • The Worker Population Ratio (WPR) rose to 53.1% from 52.2% in the previous quarter.
  • Self-employment in rural areas increased to 63.2% from 62.8% in the previous quarter.

Static Topic Bridges

Periodic Labour Force Survey (PLFS) — Methodology and Significance

The PLFS is India's primary labour force survey, conducted by the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI). It was launched in April 2017 based on the recommendations of the Amitabh Kundu Committee (Task Force on Improving Employment Data, 2009) and replaced the earlier quinquennial Employment-Unemployment Surveys conducted under the National Sample Survey (NSS).

  • Launched: April 2017 by NSO (MoSPI); first annual report published for July 2017 - June 2018
  • Frequency: Quarterly bulletins (for urban areas, using Current Weekly Status — CWS) and Annual reports (for both rural and urban, using Usual Status — Principal + Subsidiary)
  • From 2025 onwards, PLFS methodology was revised to provide quarterly bulletins covering both rural and urban areas (previously quarterly bulletins were urban-only)
  • Three key indicators: Unemployment Rate (UR), Labour Force Participation Rate (LFPR), and Worker Population Ratio (WPR)
  • Activity status classification: Usual Status (ps+ss) — activity status during reference year; Current Weekly Status (CWS) — activity status during reference week; Current Daily Status (CDS) — activity status for each day of reference week
  • The CWS-based estimates typically show higher unemployment than Usual Status estimates because they capture short-term unemployment

Connection to this news: The October-December 2025 data is from the revised PLFS methodology that now provides quarterly rural+urban estimates, making the decline in both rural (4.0%) and urban (6.7%) unemployment rates directly comparable within the same reference period.

Understanding Labour Market Indicators — UR, LFPR, and WPR

The three core indicators — Unemployment Rate (UR), Labour Force Participation Rate (LFPR), and Worker Population Ratio (WPR) — must be interpreted together for a complete picture of the labour market. A declining UR alongside a rising LFPR is the most positive scenario, indicating both more people seeking work and more people finding it.

  • LFPR = (Labour Force / Working Age Population) x 100; Labour Force = Employed + Unemployed (seeking work)
  • UR = (Unemployed persons / Labour Force) x 100; measures only those in the labour force actively seeking work
  • WPR = (Employed persons / Working Age Population) x 100; the broadest measure of employment
  • Relationship: WPR = LFPR x (1 - UR); if LFPR rises and UR falls, WPR necessarily rises (as seen in the current data)
  • A falling UR could be misleading if accompanied by a falling LFPR (indicating people have stopped looking for work — "discouraged workers")
  • In the current quarter: LFPR rose (55.1% to 55.8%), UR fell (both rural and urban), and WPR rose (52.2% to 53.1%) — all three indicators moving in the positive direction simultaneously

Connection to this news: The simultaneous improvement in all three indicators (rising LFPR and WPR, falling UR) for October-December 2025 suggests genuine labour market improvement rather than a statistical artefact of discouraged workers exiting the labour force.

Female Labour Force Participation in India

India has historically had one of the lowest female LFPR rates among major economies. The recent upward trend in female LFPR has been a significant development, though the rates remain well below global averages and below India's own male LFPR.

  • India's female LFPR (15+ years, October-December 2025): 34.9% (up from 33.7% in previous quarter)
  • Global comparison: Female LFPR global average approximately 47% (ILO); China approximately 61%; US approximately 57%; India remains among the lower performers
  • Rural female LFPR (39.4%) is significantly higher than urban female LFPR, reflecting greater participation in agricultural and informal work
  • The U-shaped hypothesis: Female LFPR initially declines during early stages of development (as subsistence agriculture declines and social norms restrict women's work) and rises later as education and service sector employment increase
  • Key government initiatives: Beti Bachao Beti Padhao (2015), PM Matru Vandana Yojana (2017), Stand Up India (2016), MUDRA loans (60% disbursed to women), and workplace safety measures under POSH Act (2013)
  • Measurement challenges: Much of women's work in India is unpaid family labour, home-based production, and care work — undercounted in survey methodologies

Connection to this news: The rise in female LFPR to 34.9% (driven by rural female participation reaching 39.4%) continues a positive trend, but the persistent rural-urban gap and the low absolute level indicate structural barriers to women's formal economic participation remain significant.

Self-Employment and Informality in India's Labour Market

The high share of self-employment in India's workforce (particularly in rural areas) is a structural feature of the labour market that reflects both entrepreneurship and the absence of adequate formal wage employment opportunities. Self-employment includes own-account workers, employers, and unpaid family workers.

  • Self-employment share (rural, October-December 2025): 63.2% (up from 62.8%)
  • Categories: Own-account workers (working alone or with unpaid family help), employers (hiring workers), and helpers in household enterprises (unpaid family labour)
  • Regular wage/salaried employment: approximately 21-23% of total employment; casual labour: approximately 15-17%
  • The rise in self-employment could indicate growth of micro-enterprises or, alternatively, a lack of formal job creation pushing workers into survivalist self-employment
  • Government programmes for self-employment: PM SVANidhi (street vendors), PMEGP (micro-enterprises), DAY-NRLM (rural livelihoods), Startup India
  • India's informal sector employs approximately 90% of the workforce (including agricultural workers); formal sector employment remains limited

Connection to this news: The rise in rural self-employment to 63.2% alongside declining unemployment must be interpreted cautiously — while it may reflect entrepreneurial activity, it could also indicate workers settling for low-productivity self-employment in the absence of regular wage opportunities.

Key Facts & Data

  • Rural unemployment rate (Oct-Dec 2025): 4.0% (down from 4.4% in Jul-Sep 2025)
  • Urban unemployment rate (Oct-Dec 2025): 6.7% (down from 6.9% in Jul-Sep 2025)
  • Overall LFPR (15+ years): 55.8% (up from 55.1%)
  • Female LFPR (15+ years): 34.9% (up from 33.7%); rural female LFPR: 39.4%
  • Worker Population Ratio: 53.1% (up from 52.2%)
  • Rural self-employment: 63.2% (up from 62.8%)
  • Urban male unemployment: 5.9% (down from 6.2%)
  • PLFS launched: April 2017; methodology revised 2025 to include rural quarterly estimates
  • Survey conducted by: NSO under MoSPI