UPDATED: May 5, 2021 09:56 IST
The unemployment rate in the country has touched a four-month high as localised lockdowns imposed in many states have impacted over 70 lakh jobs. The situation could get worse if the Covid-19 situation does not come under control by May.
The Centre for Monitoring Indian Economy (CMIE), a Mumbai-based economic think-tank, told news agency PTI that the national unemployment rate in the country has touched a four-month high of nearly 8 per cent in April. In contrast, the national unemployment rate in March was 6.5 per cent.
CMIE said that the unemployment outlook remains weak due to restrictions imposed to contain the unprecedented rise in Covid-19 cases. Mahesh Vyas, CMIE MD, told the news agency that the Covid-19 situation in the country is likely to impact employment generation in the coming months.
Experts had earlier said the impact of Covid-19 on various indicators of the economy would depend on how fast cases are contained. At the moment, the situation in India looks grim as the country continues to report over 3.5 lakh cases and over 3,400 deaths on a daily basis.
Mahesh Vyas said the jump in the unemployment rate is directly related to the localised lockdowns imposed by many states, adding that over 70 lakh jobs were lost in April in comparison to March.
CMIE data indicates that the impact of lockdowns has resulted in a higher rate of unemployment in urban areas. The unemployment rate in urban areas edged up to 9.78 per cent in April, compared to 7.13 per cent in rural areas.
Data from the think tank had earlier indicated that there has been a decline in the labour participation rate (LPR) in April as well. It also noted that the current wave of unemployment in the country is mostly affecting the informal or gig economy workers.
While white-collar jobs have not been affected yet, hiring activity dipped in April. It is worth mentioning that the decline in job positing activity started in March 2021 and the frequency has further dipped in April due to the ongoing Covid-19 situation.
LOCKDOWN OR ECONOMY: DILEMMA FOR GOVT
The rising wave of unemployment in the country could result in a dilemma for the government as cases continue to rise unabated. Many experts say that a nationwide lockdown is urgently needed to break the chain of infections, but the government is worried that it could severely impact the economy.
While there is stress on the employment front at the moment, the situation is not as bad as 2020 when India’s unemployment rate jumped sharply and GDP collapsed, said CMIE’s Vyas. India had observed a strict nationwide lockdown for months before easing restrictions in 2020.
This time, however, trade bodies and medical experts are calling for a few weeks of strict nationwide lockdown to break the chain as it will not only help save lives.
A reduction in Covid-19 cases will also lead to a faster economic recovery in comparison to the current situation, as trade is suffering due to weak consumer sentiments and lower demand. A temporary lockdown, therefore, could ensure steady economic recovery without any disruptions in future.
While it remains to be seen whether the government announces a nationwide lockdown, experts from all sectors have made it clear that the recovery of the Indian economy will depend on how fast the country can conquer the second Covid-19 wave.