New Delhi: India’s unemployment rate may soar to the highest in a year, with another 10 million jobs lost in May, as states extended restrictions to control the world’s worst coronavirus outbreak, according to a private research firm.
The nation’s unemployment rate is estimated to rise to much as 11% this month, Centre for Monitoring Indian Economy Pvt. Managing Director Mahesh Vyas said in an interview with Bloomberg Television on Wednesday. That would make it the highest since May 2020, when a nationwide lockdown imposed by Prime Minister Narendra Modi ravaged the economy.
While Modi didn’t impose a nationwide lockdown this year, most states have gone for localized curbs, disrupting economic activity. The second wave of coronavirus infections has devastated the country, with deaths exceeding 300,000 and infections rising above 27 million since the outbreak of the pandemic.
“The damage it is causing to the economy is evident in the rise in unemployment,” said Vyas. “There are many dimensions which are very disturbing. The unemployment rate is rising even as the labor participation rate is declining, which means lesser people are seeking work and even those are not finding employment in adequate numbers.”
CMIE data, which is based on surveys and is widely accepted in the absence of timely government data, shows weekly unemployment numbers are now hovering above 14%. It estimated more than 7 million job losses in April and an unemployment rate of around 8%.
The jobs problem might not get worse from here but it’s likely to last longer compared with a year ago, when it started improving after the nationwide lockdown was lifted, Vyas said. Women and young people have borne the brunt of the job losses, and the stress in rural areas this time is more than last year, he added.
“A lot of stimulus packages given by India in the last one year is to provide liquidity,” to businesses, Vyas said. “The government hasn’t taken adequate measures to fix the demand side of the problem.”