Rural joblessness jumps to14.34%ina week: CMIE
Unemployment in urban areas has risen to 14.71% in the same period, shows data
NEW DELHI: India’s rural unemployment has almost doubled within a week as Covid-19 lockdowns continues and infection in rural India spreads halting economic activities. A lull in agriculture activity is adding to the joblessness.
Rural unemployment shoots up to 14.34% in the week ended May 16 from 7.29% in the week ended May 9, fresh data from the Centre for Monitoring Indian Economy (CMIE) showed. The fresh rural unemployment is also at a 50-week high and the last time the rural unemployment was higher than this was in the week ended 7 June 2020.
Similarly, urban unemployment climbed to 14.71%, three percentage point more than a week ago period, and the national unemployment rate has soared to 14.45% from 8.67%, highlighting the jobs crisis the country is facing during the second wave of the coronavirus pandemic.
“The urban flats and rural hamlets have got infected this time. The unorganised manufacturing in rural and semi urban India has largely come to a halt. This is increasing unemployment both in formal and informal sector,” said Santosh Mehrotra, a labour economist and retired professor at Jawaharlal Nehru University.
“The MSMEs are in bad shape and informal jobs as well as self-employment in rural India are almost in tatters. The situation may actually get worse over the next few weeks if we don’t manage to tackle the pandemic in rural India. There is a demand shock, there is a supply chain constraint, and there is income loss — it’s a critical situation for any economy and labour market,” Mehrotra explained, adding that many small industries have closed down impacting job creation and retention.
Chandrakant Salunkhe, president of SME Chamber of India, concurred. “Thousands of MSME have closed down in the second wave. There is a demand crunch and companies to whom we supply are not taking orders increasing our inventory, which means products are on hold so is the payments. Then there is increase in raw material prices which is impacting our business. The revival of MEME sector will improve the job sector but that may not happen for months,” said Salunkhe, also the managing director of Salunkhe Packaging Industries.
“Lot of workers have left for their hometowns from industrial pockets and clusters of Gujarat, Karnataka and other places. So, it’s a crisis for them as well,” he said.
Arup Mitra, a professor of economics at Institute of Economic Growth, said the country is “observing high unemployment rate, high under employment, low productivity, and low-income capacity, across rural pockets, and all over the country.”
According to CMIE, the employment rate and labour force participation rate have come down significantly within a week. At all-India level, the employment rate has fallen to 34.67% in the week ended May 16 from 37.72% a week ago. During the same period, the rural employment rate has also come down to 36.26% from 39.84%.
Both Mitra and Mehrotra said that the gap between the harvest season and sowing season, the absorption in the agriculture sector will be low.
Experts said that the general economy is also not in a good shape and several rating agencies have lowered their growth forecast in recent weeks.
Rating agency Moody’s Investors Service has slashed its 2021-22 growth forecast for India to 9.3% from 13.7% estimated earlier, joining others, including Nomura, which also cut its projection from 12.6% to 10.8%.
While JP Morgan has cut it from 13% to 11%, and UBS has slashed it from 11.5% to 10%.