CMIE data highlights paradoxes in Indian Economy

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.