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Wednesday, February 1, 2023

India’s Double Trouble

The workforce in India is being crushed between inflation and joblessness chiefly on account of the wrong policy stance of the Narendra Modi government and the pandemic may be just an additional excuse. Retail inflation (CPI) in April soared to an 8-year high and touched 7.79 percent as against 8.3 percent in May 2014, which he had strongly criticised during his election campaign. In place of the promise of providing one crore jobs every year, his government delivered an unprecedented level of joblessness in decades, further exacerbated by the pandemic

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The workforce in India is being crushed between inflation and joblessness chiefly on account of the wrong policy stance of the Narendra Modi government and the pandemic may be just an additional excuse. Retail inflation (CPI) in April soared to an 8-year high and touched 7.79 percent as against 8.3 percent in May 2014, which he had strongly criticised during his election campaign. In place of the promise of providing one crore jobs every year, his government delivered an unprecedented level of joblessness in decades, further exacerbated by the pandemic. High taxes on petrol and diesel, high administered prices, and high GST rates have all along been fuelling the rise of inflation. The pandemic and other domestic and external factors did have its impact and the government seemed to be stupefied. Rethinking its old wrong priorities was required but the center continued with them, and in several cases vigorously followed them. The worsening market condition with price rise and inflation and labour market deterioration with a large number of job loss, the declining opportunity for jobs, and rising unemployment have become the characteristic features of the entire Modi rule.

Having said this, the month of April 2022 witnessed substantially increased activities in the labour market, however, the additional jobs that became available were inadequate compared to the demand. A large number of the frustrated people who have left the labour market and had stopped even searching for jobs resumed their search, though the search has become costly. Notably, the unemployment rate has increased to 7.88 percent in April as compared to 7.57 percent in March, according to the latest CMIE assessment. April 2022 also saw a 2.3 million increase in the count of those who stated that they were unemployed and were willing to work if work was made available to them but were not actively looking for employment. The count of these rose to 19.5 million in April 2022. The agriculture sector also shed 5.2 million jobs in April. Part of this decline in the labour force was due to the winding of the rabi harvesting season, shrivelling of the wheat crop, and the consequent decline in wheat production. Since the recent rise in CPI inflation was chiefly due to the rise in prices of food articles, the wheat production fall indicates that its prices will increase shortly which may push up the prices of rice also due to a shift in demand. The further rise in inflation can thus not be ruled out.

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A matter of more serious concern is that the increase in employment in industry and services was in low-quality jobs. The CMIE says that it indicated the fact that the increase in employment was largely among daily wage labour and small traders. This type of occupation saw an increase of 7.9 million jobs. Entrepreneurs increased by 4 million and farmers fell by 5.1 million. There was almost no change in salaried jobs which were close to 79 million during March and April 2020, much below 87 million before the pandemic in 2019-20. A big increase of 12 million was reported in non-farm jobs, two-thirds of which were daily wage labourers and small traders. In this scenario, the Modi government needs to urgently redress the twin evil of inflation and joblessness by reviewing its entire set of policies that have been fuelling both. Alibi is a bad defense and bad politics. Good governance with better policies may help reverse the trend. Relying solely on RBI intervention, such as raising interest rates, will not be sufficient.

 

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The Hills Timeshttps://www.thehillstimes.in/
The Hills Times, a largely circulated English daily published from Diphu and printed in Guwahati, having vast readership in hills districts of Assam, and neighbouring Nagaland, Meghalaya, Arunachal Pradesh and Manipur.
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