India's unemployment rate has drastically dropped to 6.43 per cent in September due to an increase in labour participation in the rural and urban areas, according to data from the Centre for Monitoring Indian Economy (CMIE).

During August, India's unemployment rate surged to a one-year high of 8.3 per cent as employment sequentially fell by 2 million to 394.6 million.

"In September, the unemployment rate has fallen significantly with an increase in labour participation in both urban and rural areas," CMIE managing director Mahesh Vyas told PTI over the phone on Saturday.

The unemployment rate in the rural areas fell to 5.84 per cent in September from 7.68 per cent in August, while in the urban areas it dropped to 7.70 per cent against 9.57 per cent in the previous month, according to the data.

The nearly 8 million increase in labour participation is a sign that the economy of the country is doing well, Vyas added.

According to the CMIE data, the unemployment rate was the highest in Rajasthan at 23.8 per cent in September, followed by Jammu and Kashmir at 23.2 per cent, Haryana at 22.9 per cent, Tripura at 17 per cent, Jharkhand at 12.2 per cent and Bihar at 11.4 per cent.

The unemployment was the lowest in Chhattisgarh at 0.1 per cent in September, followed by Assam at 0.4 per cent, Uttrakhand at 0.5 per cent, Madhya Pradesh at 0.9 per cent, Gujarat at 1.6 per cent, Meghalaya at 2.3 per cent and Odisha at 2.9 per cent, the data showed.

Meanwhile, in August, the unemployment rate surged to a one-year high as erratic rainfall, which impacted sowing activities, affected employment in rural India.

In August, the urban unemployment rate shot up to 9.6 per cent and the rural unemployment rate also increased to 7.7 per cent, the CMIE data showed.