CMIE data highlights paradoxes in Indian Economy

  • IASbaba
  • October 21, 2020
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CMIE data highlights paradoxes in Indian Economy

Part of: GS Prelims and GS-III – Economy

In news

  • Centre for Monitoring Indian Economy (CMIE) data has recently highlighted some paradoxes for India during the economic recovery after the lockdown. 

Key takeaways

  • The data shows that there is a revival in employment but a fall in labour force participation. 
  • However, the usual trend is when more people find jobs, a greater number should have looked for jobs.
  • This unusual trend could be due to a rural-urban disaggregation of the data. 
  • Rural India is seeing an increase in jobs due to post harvest activity whereas employment in urban India is decreasing.
  • Besides, better quality and higher paying jobs in urban areas are not available.
  • These are getting replaced by lower-paid rural jobs.
  • This also points to the fact that a reversal of migration back to the cities is not happening as expected level.
  • The lower rates of supply side due to lockdown have led to an increase in headline inflation leading to increase in food prices.
  • However, there is a rise in core inflation also which is unusual.
  • Ideally, the reduced demand due to lockdown should have decreased core inflation.
  • Also, households have reported better prospects or hopes for the future.

Do you know?

  • Headline inflation is a measure of the total inflation within an economy, including commodities such as food and energy prices.
  • Core inflation is the change in the costs of goods and services but does not include those from the food and energy sectors.

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