Employment & Recovery of Indian economy

  • IASbaba
  • May 24, 2021
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ECONOMY/ GOVERNANCE

Topic:

  • GS-2: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment. 

Employment & Recovery of Indian economy

Context: Hit by a relentless second wave of COVID-19 infections, India has seen localised lockdowns across several States. 

Do You Know?

  • Labour participation Rate(LPR) is the measure the section of the population that is willing to take on jobs. 
  • Unemployment is a subset, which helps in giving a measure of those who are willing to take on jobs but are not employed. 

How have lockdowns affected jobs? 

  • According to the Centre for Monitoring Indian Economy (CMIE), the unemployment rate was 6.5% in March 2021 but rose to around 8% in April, the month when several States began to prepare for or had already imposed lockdowns. 
  • With 73.5 lakh job losses in April 2021, the number of employees (both salaried and non-salaried) fell from 39.81 crore in March to 39.08 crore in April for the third straight month.
  • In April 2020, which was the first full month of the national lockdown last year, the unemployment rate had zoomed to 23.5%.
Rural-Urban Variation in Unemployment
  • At 7.13%, the rural unemployment rate for April 2021 is lower than the urban figure of 9.8%. 
  • The month of May has seen the rates rise further at the national level. As of May 21, the 30-day moving average for overall unemployment was 10.3%, with the relevant figures for urban and rural areas at 12.2% and 9.4%, respectively. 
Gender variation in unemployment
  • Women tend to face a double challenge, with lower labour participation and a higher unemployment rate for females compared with males (for ages above 15). 
  • For the January-April 2021 period, urban female LPR was 7.2% compared with the urban male’s 64.8%, while urban female unemployment was 18.4% against the urban male unemployment rate of 6.6%, CMIE data showed.
Agriculture Sector
  • Agriculture was the saving grace during the first wave, but it is not so during the second one. 
  • April 2020 saw this sector being the only one to add jobs — the count of those employed in the agriculture sector had gone up by 6 million or 5% compared with the average count in FY20.
  • In April 2021, agriculture shed 6 million jobs compared to a month earlier. This figure ties in with reports of the hinterland being far more affected by the pandemic this year 
  • MGNREGA data showed that April saw an uptick in the demand for jobs — 2.7 crore households signed up for work in April 2021, rising from 1.3 crore a year earlier — as reverse migration of labour picked up, resulting in availability of hands in the rural parts.
Salaried Class
  • The cumulative loss of salaried jobs since the pandemic began is pegged at 12.6 million, according to CMIE data
  • The trend continues with April 2021 seeing a drop 3.4 million jobs from the level in March 2021.
Variation across States
  • Haryana recorded the highest unemployment rate in April 2021 at 35%, as per CMIE data, followed by Rajasthan at 28%, Delhi at 27.3%, and Goa at 25.7%. 
  • Significantly, Gujarat, which, like the above States, also witnessed the ferocity of the pandemic’s second wave, saw unemployment at an appreciably lower level of 1.8%.

What are the consequences of rising unemployment?

  • Reduced Family incomes
  • Increased poverty levels
  • Increased hunger: The Hunger Watch survey showed that 66% of surveyed households had less to eat even five months after last year’s lockdown.
  • Increased debt levels- Households cope with this shock by borrowing, largely from informal sources, and selling assets.
  • Weak consumer sentiment – demand shock – loss of mobility, low discretionary spending and inventory accumulation.
  • Lower-than-anticipated economic recovery

Measures taken by governments to address the economic situation

  • The Central government has announced that it will distribute 5 kg of rice and wheat for free to ration card holders across the country. Individual States have added to this. 
  • Karnataka has announced a ₹1,250-crore relief package, through which farmers, auto, taxi and maxi cab drivers, construction workers and other informal sector workers will receive varying amounts in the form of a one-time dole.

Connecting the dots:

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