Unemployment in India has moved up further in August.
Urban unemployment has risen to 9.83% in August from 9.15% in July, according to monthly unemployment data released on Tuesday by the Centre for Monitoring Indian Economy (CMIE). Likewise, the rural unemployment rate, too, is up to 7.65% in August from 6.66% in July.
The overall unemployment rate is up to 8.35% in August from 7.43% in July. This number is a tad lower than 8.75% in March when the Covid-19 spread across India.
Between December 2019 and February 2020, the pre-COVID months, the rate hovered between 7.22% and 7.76%.
The rise in unemployment number comes at a time when the country has lifted most of the virus-related curbs imposed in March following the lock-down announcements.
A combination of falling jobs in the formal sector and job saturation in the farm sector appears to have caused the rise in the August unemployment rate.
Among states, Haryana was the worst-hit, with a 33.5% unemployment rate in August. Tripura came next at 27.9%. Karnataka (0.5%) and Odisha (1.4%) were better off in absorbing workers in August, data revealed.
The CMIE employment number came to a couple of days after India reported the steepest ever fall in its GDP (gross domestic product). The GDP shrank by 23.9% in the June quarter.
This is the first time the Indian economy has contracted so much since it started publishing quarterly GDP figures. The previous worst occurred in January-March 2009 when the economy grew by 0.2%. The GDP number must be read in the context of severest lock-down restrictions by India. The mobility of the people was hugely constrained. The fact of the matter is that the supply chain was severely hit during this phase. And, the result was obvious. Notwithstanding these, the virus cases have increased consistently.
An increase of nearly 80,000 cases daily is a real cause for concern. A sense of fear has further played on the mobility and consumption behavior of people. In such a crisis situation, the tendency was to conserve cash.
The Indian government too was cash-constrained and hence had very little leeway to spend more to get the economy out of the quick-sand.
Nevertheless, there are signs of cheers. The Purchasing Managers’ Index (PMI) for manufacturing, released by IHS Markit expanded to 52 in August from 46 in July. Also, the auto sales number for August too was robust on a year-on-year basis. The GST (goods and services tax) collection in August has risen to 88% of the mop-up in August last year, indicating that the economy is starting to gain some pace.
It is too early yet to make any guess about the course of the economy. For, the virus cases are on the rise. Notwithstanding a steady exit from lock-down, the fear over the escalating cases of the virus still has the potential to damage the revival of the economy.