Rural jobs back to pre-lockdown level

The Uttar Pradesh government has imposed a ban on the installation of new China-made meters by the state power department. "Installation of Chinese meter has been banned in the state," an official spokesman of the power department said, adding, "The details have been sought about orders of Chinese meters and equipment and also contracts of Chinese items awarded in the past one year."

The unemployment rate in rural India has dropped below pre-lockdown levels, with an increase in persondays under the MGNREGA and a rise in kharif sowing activity. The overall unemployment rate, too, has come down to pre-lockdown levels despite the urban rate staying higher.

The rural unemployment rate stood at 7.26 per cent in the week ended June 21. This is lower than 8.3 per cent in the pre-lockdown week ended March 22 as well as the average unemployment rates in February and March 2020, which were 7.34 per cent and 8.4 per cent, respectively. However, it is a little higher than the 13-week average pre-lockdown rate of 6.8 per cent, as per the data from CMIE. During the 13-week lockdown period, the average rural unemployment rate had gone up to 20.3 per cent.

The relaxation of the lockdown has helped in alleviating unemployment in general. Rural India has gained by the increase in Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA) activities and by a rise in kharif sowing, says Mahesh Vyas, managing director of CMIE.

The person-days of jobs created in May 2020 by the MGNREGA shot up to 565 million, which is 53 per cent higher than the 370 million person-days of jobs created in May 2019. Around 33 million households benefited from the scheme in May, which is 55 per cent higher than that in the year-ago month.

Further, the southwest monsoon began on time and moved into central and western India ahead of schedule. Rainfall during the first fortnight was 32 per cent higher than the long-period average, helping kharif sowing move up 39.4 per cent higher compared to the same period last year. MGNREGA activities also have helped Kharif sowing.

The rise in rural employment rate has also helped the overall unemployment rate fall to its pre-lockdown level of 8.5 per cent in the week ended June 21. The rate had spiked from 8.75 per cent in March to 23.5 per cent in April and May and had peaked at 27.1 per cent in the week ended May 3. The overall unemployment rate had started falling thereafter.

Though urban unemployment too has fallen sharply, it is still higher than the pre-lockdown levels. In the latest week ended June 21, the rate was down to 11.2 per cent. This is still over 200 basis points higher than the 9 per cent average in the period before the lockdown.

While many cities and towns have started opening up, some of the larger cities like Chennai and Delhi have moved back from reduced restrictions to stricter restrictions.

Abundant liquidity, easing of tensions on the India-China border and rising Covid-19 recovery rate helped benchmark indices close at four months’ high. The rally in banks & financials have now entered other quality large-cap stocks along with investors buying in the broader market in hopes of the economy limping back to normalcy.

The market also rallied on relaxations announced by the Securities and Exchange Board of India (Sebi) for listed companies with stressed assets in raising funds by way of preferential issue of shares or convertible instruments to investors.

The Sensex gained 519.11 points or 1.5 per cent as the index rose above 35000-mark helped by a fourth consecutive day of gains and closed at 35430.43. The Nifty-50 index closed at 10,471 up 159.80 points or 1.55 per cent

During the last two trading sessions bank stocks have outperformed the market benchmarks by a big margin.

Nifty Bank index and PSU Bank index gained 2.56 per cent and 3.41 per cent, respectively.

Hemang Jani, head equity strategist-broking & distribution, Motilal Oswal Financial Services, said, "We have seen strong buying interest across financial companies in the past three weeks. This sector traditionally has high weight in the Nifty index (around 33 per cent) and is a high beta sector."

Also the Supreme Court’s direction to the central government and the RBI to review interest waiver during the moratorium period and deferment of the hearing to the first week of August has raised hopes that the apex court will not give an adverse judgment, which could be otherwise be a blow to financial services companies and dent credit culture in the country, brokerages said.