Top 10 Indian States With Highest Unemployment Rates

The current population of India is 1,441,719,852 as of 2024, which is still growing with every second, making it the second most populous country in the world after China. The rapid population growth in India poses challenges to infrastructure, resources, and social services. 

It even has created a void for employment rates, leading to increased competition in the job market and higher unemployment rates, particularly among the younger population. 

Many states have been pressured to provide employment opportunities and improve living conditions for their citizens to address these issues. 

Here is the list of the top 10 Indian states with the highest youth unemployment rates. Let's take a closer look at these states and analyse the factors contributing to their high unemployment rates.

Also Read| Which State Has The Highest Unemployment Rate In India?

List of the Indian States With the Highest Unemployment Rates 

Here's the list of the top 10 Indian states with the highest unemployment rates. These states are facing significant challenges in creating job opportunities for their residents, leading to high levels of unemployment.

Data is derived from the Periodic Labour Force Survey (PLFS) conducted from July 2023 to June 2024. This data shows the percentages of youth unemployment (aged 15-59) in rural and urban areas. 

Source: National Sample Survey Office (NSSO) 

1. Lakshadweep

Lakshadweep has the highest unemployment rate in India, with a total unemployment rate of 12.3%, significantly influenced by its geographic isolation and limited economic diversification. 

The islands primarily rely on fishing and coconut cultivation, which do not provide sufficient job opportunities for the growing population. 

Additionally, the lack of industrial development and educational facilities limits skill acquisition among the youth, leading to high unemployment rates, especially among females at 34.1%.

To combat this issue, the Lakshadweep administration is focusing on enhancing tourism, which holds the potential for job creation. 

Initiatives include improving infrastructure to attract tourists and promoting local handicrafts. 

The government is also exploring vocational training programmes to equip residents with skills relevant to emerging sectors like hospitality and marine tourism. 

By diversifying the economy and investing in education, Lakshadweep aims to reduce unemployment and improve living standards for its residents.

2. Andaman & Nicobar Islands

The Andaman & Nicobar Islands also report a high unemployment rate of 12.3%, exacerbated by their remote location and reliance on tourism and agriculture. 

The islands face challenges in creating sustainable employment opportunities due to limited industrialisation and infrastructure development. 

The unemployment rate is particularly high among females at 21.4%, reflecting the lack of job options available to women in these regions.

In response, the state government is implementing measures to boost tourism by developing eco-tourism and adventure tourism initiatives. 

Efforts are underway to enhance connectivity through better transport links, making the islands more accessible. 

Additionally, the administration is promoting skill development programmes tailored for local youth, focusing on hospitality and marine services to create a more skilled workforce that can meet the demands of a growing tourism sector.

3. Jammu & Kashmir

Jammu & Kashmir has a total unemployment rate of 6.7%, with significant disparities between male (4.2%) and female (10.4%) unemployment rates. 

The region's prolonged conflict has hindered economic development, leading to job scarcity and a lack of investment in key sectors such as manufacturing and services.

To address these issues, the Jammu & Kashmir government is focusing on enhancing infrastructure and promoting tourism as a primary economic driver. 

Initiatives include developing pilgrimage circuits and adventure tourism to attract visitors. 

Furthermore, efforts are underway to develop industrial estates and encourage entrepreneurship by providing financial assistance and training schemes to empower young people with the skills required for different trades.

4. Ladakh

Ladakh's unemployment rate stands at 5.6%, with males experiencing a rate of 2.9% and females at 9.7%. 

The region's economy is largely dependent on agriculture, tourism, and traditional crafts; however, its harsh climate limits agricultural productivity and job creation.

The Ladakhi government is working on initiatives to boost tourism by promoting its unique cultural heritage and natural beauty. 

Additionally, there are plans to develop infrastructure that supports eco-tourism and adventure sports, which could create more jobs for locals. 

Skill development programmes are also being introduced to prepare the workforce for emerging sectors such as hospitality and handicrafts, aiming to enhance local employment opportunities.

5. Himachal Pradesh

Himachal Pradesh has an overall unemployment rate of 6.2% with males at 3.9% and females at 8.6%. 

The state's economy relies heavily on agriculture and tourism; however, seasonal employment patterns lead to significant fluctuations in job availability throughout the year.

To mitigate unemployment, the Himachal Pradesh government is focusing on diversifying its economy by promoting industries such as information technology and renewable energy. 

Initiatives include establishing industrial parks that attract investment while also enhancing infrastructure for better connectivity. 

Furthermore, skill development programmes are being implemented to empower youth with the necessary skills for various sectors, including hospitality, which could help stabilise employment throughout the year.

6. Arunachal Pradesh

Arunachal Pradesh has an unemployment rate of 6.5%, with male unemployment at 6.4% and female unemployment at 6.5%. 

The state's economic activities are primarily based on agriculture, but limited infrastructure hampers growth in other sectors like manufacturing or services.

The state government is actively working on improving road connectivity and promoting hydropower projects as part of its strategy to generate jobs. 

Additionally, there are initiatives aimed at enhancing agricultural productivity through modern techniques and practices, which could lead to more stable employment opportunities in rural areas. 

Skill development programmes are also being introduced to prepare the local workforce for various emerging industries.

7. Meghalaya

Meghalaya's total unemployment rate stands at 6.6%, with males at 4.6% and females at 8.7%. The state faces challenges due to its reliance on agriculture and limited industrialisation, resulting in insufficient job creation for its growing population.

In response, the Meghalaya government has initiated several programmes aimed at boosting employment through agriculture enhancement projects and skill development initiatives tailored for youth in sectors like tourism and handicrafts. 

There is also a focus on improving infrastructure to facilitate better access to markets for local products while promoting eco-tourism as a means of generating sustainable employment opportunities.

8. Nagaland

Nagaland reports an overall unemployment rate of 7.8%, with males at 7.7% and females at 7.8%. 

The state struggles with high unemployment due to limited industrial activity and reliance on subsistence agriculture.

To tackle these challenges, the Nagaland government is emphasising entrepreneurship development through various schemes that provide financial assistance and training for small businesses.

Additionally, there are efforts underway to promote tourism by highlighting cultural heritage sites, which could create jobs in hospitality services, while also investing in vocational training programmes aimed at equipping youth with marketable skills.

9. Kerala

Kerala has an overall unemployment rate of 8.8%, with male unemployment at 5.4% and female unemployment significantly higher at 13.9%. 

Despite being known for high literacy rates, the state faces challenges due to a mismatch between education outcomes and job market needs.

To tackle this challenge, the Kerala government prioritises improving job readiness with industry-aligned skill programmes. They also highlight information technology, healthcare, and tourism for employment opportunities. 

Additionally, there are efforts to foster entrepreneurship among youth through financial support schemes aimed at encouraging startups in innovative sectors

10. Goa

Goa's total unemployment rate stands at 8.9%, with male unemployment at 5.5% and female unemployment reaching 17.3%. 

The state's economy heavily relies on tourism; however, seasonal fluctuations lead to inconsistent job availability throughout the year.

In response to high unemployment rates, the Goa government is working to diversify its economy by promoting sectors such as information technology alongside traditional tourism initiatives aimed at attracting year-round visitors rather than just seasonal ones. 

Skill development programmes are also being rolled out targeting youth in hospitality management while enhancing infrastructure facilities that support these initiatives.

How does the Unemployment Rate in Rural Areas Compare to Urban Areas in these States?

In the Indian states with the highest unemployment rates, there is a notable disparity between rural and urban areas. Generally, rural areas tend to have lower unemployment rates compared to their urban counterparts.

For instance, the unemployment rate in rural areas is often around 5.3%, while urban areas can see rates as high as 7.8% or more, reflecting a significant urban-rural divide in job availability and economic opportunities.

Rural employment is primarily driven by agriculture and informal sectors, which absorb surplus labour, whereas urban areas face challenges due to higher competition and a mismatch between education and job market needs.

Despite having lower unemployment rates, rural areas often experience underemployment and lower wages compared to urban sectors, where jobs may be more formal but less accessible. 

What are the Main Causes of Higher Unemployment in Urban Areas Compared to Rural Areas?

Higher unemployment rates in urban areas compared to rural regions can be attributed to several key factors:

Labour Oversupply: Rapid rural-to-urban migration leads to an oversupply of labour in cities. This influx often results in more job seekers than available positions, particularly in low-skill jobs, increasing competition and unemployment rates among migrants.

Skill Mismatch: Urban areas frequently experience structural unemployment due to a mismatch between the skills possessed by workers and those demanded by industries. Many urban workers are either overqualified or lack the specific skills needed for available jobs, contributing to higher unemployment.

Informal Sector Dominance: A significant portion of urban employment is in the informal sector, characterised by low pay and job insecurity. Workers often face inconsistent employment opportunities and are forced to accept jobs below their skill levels due to a lack of formal employment options.

Economic Transition: Urban areas are often undergoing economic transformations that can lead to job losses in traditional sectors, while new job creation may not keep pace with population growth. This dynamic can exacerbate unemployment rates as workers struggle to adapt to changing industry demands.

Credential Inflation: Overemphasis on educational qualifications can lead to situations where individuals are overqualified for available jobs, resulting in underemployment or unemployment.

Related Stories| The rising problem of unemployment: What does the India Employment Report 2024 suggest?