India's unemployment rate rises to 8.7 percent in March

Source: Xinhua | 2020-04-08

India's unemployment rate spiked to the highest level recorded in 43 months in March this year, Centre for Monitoring Indian Economy (CMIE) said Tuesday.

"The unemployment rate in March was 8.7 percent. This is the highest unemployment rate in 43 months. Or, since September 2016. The rate has climbed rather steeply from the 7.16 percent level of January 2020. The unemployment rate has been rising steadily since its low point of 3.4 percent in July 2017," the CMIE in its report said.

The CMIE, which is India's leading business information company based in Mumbai, has described the situation worrisome.

"The unemployment rate during this last week was 23.8 percent. Labour participation rate (LPR) fell to 39 percent and the employment rate was a mere 30 percent," the report said. "Telephonic interviews caught pace in the week ended April 5. We had 9,429 observations. These yielded an unemployment rate of 23.4 percent during this week; an LPR of 36 percent and an employment rate of 27.7 percent. This is really worrisome."

At present, the entire world is collectively reeling from the effects of coronavirus. Millions of jobs have been lost and economies are in deep crisis. However, in India, the situation was grim even before the ongoing COVID-19 pandemic.

According to the CMIE, the employment rate fell to an all-time low of 38.2 percent in March 2020.

"The fall since January 2020 is particularly steep -- almost spectacular. It seems to have nosedived in March after having struggled to remain stable over the past two years. Then, there is a precipitous fall," the report said.

"The labour participation rate in March 2020 was 41.9 percent. It was 42.6 percent in February and 42.7 percent in March 2019. We had feared a fall in labour participation rate because of the national shutdown to contain the spread of coronavirus. But, this fall seems to have happened even before the lockdown. Of course, it gets much worse as we move into the lockdown."

The CMIE report comes as India Tuesday entered the fourteenth day of a 21-day nationwide lockdown announced by Prime Minister Narendra Modi to curb the spread of the novel coronavirus and its transmission into the community.

Authorities have imposed strict curfew-like restrictions to prevent the movement of people across the country. All road, rail and air services have been suspended in wake of the lockdown, except essential services which are exempted.

The federal government has asked states to strictly enforce the ongoing lockdown to contain the spread of the novel coronavirus and break the chain of its transmission in the country.

Details released by the federal health ministry Tuesday morning showed that the death toll due to COVID-19 in India rose to 114 and the total cases reached 4,421.

India's economy suffered from a prolonged period of slowing growth much ahead of the lockdown.

The Indian government had earlier projected GDP growth at 5 percent in 2019-20 as compared to 6.1 percent in 2018-19. The Q3 had witnessed a 4.7 percent growth.

Many ratings groups have estimated a much worse situation for the economy due to the fallout from the coronavirus outbreak.

Moody's Investors Service (MIS), an American credit rating agency, in March cut India's economic growth forecast for 2020 to 2.5 percent from previously estimated 5.3 percent amid the coronavirus pandemic that it said was likely to impact the economy.

Earlier this month, Fitch Ratings said India's GDP may expand 2 percent in financial year 2021 -- the slowest pace since the economy was liberalised 30 years ago.