As economic activities gain momentum, unemployment rate falls to 6.5%


As economic activities continue to gain momentum, the unemployment rate in India declined to 6.5 per cent in March, according to data from the Centre for Monitoring India Economy (CMIE).

In February, the unemployment rate was 6.9 per cent.

Interestingly, the urban unemployment rate rose to 7.24 per cent last month from 6.99 per cent in February, indicating that the Covid-19 pandemic still has its impact on the employment scenario. In January and February, the unemployment rate for urban areas had declined.

The rural unemployment rate, however, declined to 6.19 per cent in March from 6.86 per cent the previous month, as per the CMIE data.

Although the employment scenario in the country seems to be improving, the recent spurt in the number of Covid cases and the resultant local restrictions have raised concerns of another hit in the economy and the job market.

Several experts and industry participants have advocated against stringent lockdowns, even at local and state levels.

“Covid-19 infections have been rising in recent times. In Maharashtra, the rise is alarming enough for the Chief Minister to warn of the possibility of a return to lockdown days. However, unlike a year ago, there are several voices that suggest that a lockdown is not the solution,” said Mahesh Vyas, CEO of CMIE.

Noting that science has delivered vaccines against the virus, he said that efficient administration of inoculations along with sustained discipline in maintaining physical distance is a better strategy than a ‘draconian’ lockdown.

“The livelihood cost of a lockdown is too high. Average household incomes fell by 9.2 per cent in March 2020 and by 27.9 per cent in April 2020 as a result of the lockdown,” Vyas said.

He noted that household incomes had not repaired to their pre-lockdown levels even in October 2020, the latest month for which income data is available.

Average household income in October 2020 was 12 per cent lower than what it was a year ago, Vyas said, adding that given that employment in October 2020 was also lower than what it was a year ago, aggregate household income was even lower than the average household income.

Amid a massive surge in Covid-19 cases in Pune, the district administration on Friday came out with a ‘mini-lockdown’ style night curfew and other stringent norms for a week to control the spread of the virus.

This will include shutting down hotels, restaurants, bars, cinema halls and multiplexes, and extension of the night curfew hours from 8 pm-7 am to 6 pm-6 am, or 12 hours, starting Saturday.

Such stringent measures, if extended or taken up in other places, may result in losses to businesses and further loss of jobs.

Anand Mahindra, the Chairman of the Mahindra Group, had recently urged Maharashtra Chief Minister Uddhav Thackeray to avoid a lockdown as it hurts the poor and small businesses.

“The problem, @OfficeofUTji, is that the people a lockdown hurts most are the poor, migrant workers & small businesses. The original lockdowns were essentially to buy time to build up hospital/health infrastructure. Let’s focus on resurrecting that & on avoiding mortality,” he had tweeted recently.