India witnesses job recovery, unemployment rate back to pre-lockdown era
Bruised by the coronavirus-necessitated lockdown, the Indian economy has shown few signs of recovery as the unemployment rate is reported to have returned to the pre-lockdown period. Centre for Monitoring Indian Economy (CMIE), a Mumbai based think-tank, revealed the nation's unemployment rate reached 8.5% in the week ending on June 21. Albeit concerning, these numbers do hint the economy is rebounding.
A lockdown was imposed in March to stop coronavirus' transmission
The easily-transmissible COVID-19 disease forced the Centre to take a brute call — impose a lockdown on March 25. Trains, buses, flights, were shut, and so were markets and offices. India's lockdown, the biggest in the world, was stretched four times, and relaxations were given with each extension. In June, India's unlocking began as most curbs were rolled back. The economy stared at healing.
Exodus of migrant workers dampened India's road to recovery
Even with the advent of unlocking, the situation looked grim for the economy as the maximum chunk of laborers went from bigger cities to their home states. The exodus, a humanitarian crisis, earned the federal and state governments criticism. To kick-start the wheels of the economy, Prime Minister Narendra Modi had earlier announced a Rs. 20 lakh crore package to help all the sectors.
Unemployment rate reached 27.1% in week ending May 3
While the rebound time was pegged at several months, CMIE's findings offer some respite. The think-tank said unemployment peaked to 27.1% in the week ending on May 3 but made considerable gains after that. "In the first three weeks of June the unemployment rate dropped dramatically to first 17.5% then 11.6% and now 8.5%," CMIE's CEO Mahesh Vyas said.
Urban unemployment rate dipped, but it's worse than pre-lockdown days
Further, CMIE revealed that in the week ending June 21, the unemployment rate in urban India was 11.2%, lower than the April-May peak of 25.83%, or the average unemployment rate of 23.18% during the 13-week lockdown period. This happened as towns started opening up. However, it's still higher than the average unemployment rate of 9% in the 13 weeks before the restrictions were imposed.
Rural India made bigger gains, trend will continue
According to CMIE, bigger gains were reported from rural India, and the trend will continue in the coming weeks. "The unemployment rate dropped to 7.26% in rural India in the week ending June 21. This is lower than it was in the pre-lockdown week ended March 22 when the rate was 8.3%," Vyas said. The average unemployment rate in February and March was 7.34% and 8.4% respectively.
MGNREGA played big role in fixing rural unemployment rate
Vyas said, "While the relaxation helped in alleviating the unemployment stress in general, rural India has apparently gained by the massive sudden increase in Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA) activities and also by a sharp increase in kharif sowing this year."
A large number of households benefited in May 2020
According to the study, person-days of jobs created swelled to 565 million in May. This has never happened in the past. To give a perspective, in May 2019, 370 million person-days of jobs were added. 33 million households reaped benefits of the scheme in May 2020, a whopping 55% higher than last year. Good rainfall increased kharif crops sowing by 39.4%.
Consumption rise expected in rural India
"The overlap of Garib Kalyan Rojgar Yojana with MGNREGA is unclear. Nevertheless, rural unemployment can be expected to remain low till October 2020 at least. These efforts can also be expected to raise consumption demand from rural India," Vyas concluded.
