India’s unemployment rate hit a nearly four-month high in April, and the outlook has been weakened by the state government’s prolonged lockdown to stem record growth in virus cases.
According to data from a private research company at the Center for Monitoring Indian Economy Pvt. Ltd., unemployment rose to 9.7% from 7% in March.
“There is a decline in available jobs,” CMIE managing director Mahesh Vyas said by telephone. This may be due to a lockout. “The virus is still quite severe and we are under pressure on the medical healthcare front. The situation is likely to remain tense in May as well.”
The death toll of the daily Kovid-19 in India reached a record 3,689 on Sunday. India became the first country to register more than 40,000 cases on Saturday after the number of new cases slowed down on Monday.
Prime Minister Narendra Modi, who announced a tight lockdown in March 2020 that resulted in millions of jobs and record contraction in economic output, is now urging states to use such measures only as a last resort. Local administrators have been forced to increase economic control as economic reforms are jeopardized as they cannot cope with the country’s devastating health infrastructure virus flood.
The weak employment outlook is a risk to India’s double-digit economic growth this year. Many economists have already lowered their estimates, while many are warning of possible declines if provincial curbs are pushed forward.
Economist Rahul Bajoria wrote in a research note that Barclays Bank plc on Monday lowered its forecast from one percentage point to 10%, as “there is growing uncertainty about the number of cases and casualties,” economist Rahul Bajoria wrote in a research note. “Slow vaccination also hurts India’s recovery prospects.”
Unemployment has risen amid a backlash against government management over the world’s worst Covid-19 outbreak. PM Modi’s party lost the elections in the main state, while foreign envoys on social media are begging for help in making a few medical supplies available to connect Indians.
A separate survey by IHS Markets on Monday showed that despite the manufacturing sector losing jobs in April, the contraction rate was the weakest in the current 13-month order of job shedding. CMIE data – which economists closely track in the absence of government real-time employment data – shows that unemployment is more acute in urban areas as laborers return to their villages.
The labor-force participation rate, which includes the number of people who have jobs and the number of people who get jobs, fell to just under 40% in April.
“It’s a double whammy for the economy,” Vyas said. “Some people get frustrated and leave the labor market.” The problem is that the Indian economy is unable to get enough employment for those who want it, so incomes are falling. “