The National Statistical Office (NSO) released the official growth data last Monday that estimated India’s Q1 GDP at -23.9%. The economic growth has sharply plummeted since the country witnessed a close-down of the economy during the month of March. It, furthermore, impacted “the data collection mechanisms” as “the usual data sources were substituted by alternatives like GST, interactions with professional bodies etc. and which were clearly limited.“
Click here to read the release by the Ministry of Statistics and Programme Implementation.
This historic fall in the growth has been the worst quarterly performance of the country in many decades. Among the G20 countries, India’s GDP saw the sharpest contraction in the June quarter, which was, also, confirmed by the IMF’s chief economist Gita Gopinath.
India began publishing quarterly GDP data since 1996 and had never experienced a negative growth rate until now. The labour-intensive sector like construction, manufacturing, etc, contracted at a higher rate in the April-June quarter, 50% and 39.3%, respectively.
- Plaguing unemployment:
The unemployment data released by the Centre for Monitoring Indian Economy (CMIE) marked the urban unemployment at 9.83% in August as against 9.15% in July. This is nearly as high 10% and suggests that 1 in every 10 urban Indian is unemployed. This is against the country’s overall unemployment rate of 8.35% in August against 7.43% in July. The constant lay-offs and furloughs by the businesses are adding to the unemployment crisis in the country amid a panicky economic environment.
- College Graduates and the Job Crisis:
The unemployment rate had essentially been deteriorating since 2019 when India witnessed the highest unemployment figures in 45 years. The pandemic has worsened these figures. The aforementioned data on urban unemployment is necessary when we look into the fact that the urban sector represents the plenitude of salaried jobs in the country. Over 19 million salaried individuals were laid off in the month of July and this figure rose in August.
The country will have face numerous challenges to create jobs for the people now that the pandemic has paralyzed various sectors of the economy. The unorganized sector has also received a severe blow and it accounts for 94% of the employment. The Finance Minister, Nirmala Sitharaman, mentioned that the Central Government would not be able to pay the GST compensation cess to the States. With the treasuries of the States exhausted in dealing with the pandemic, it is not long before they are unable to pay the State Government employees.
Economists have suggested that it would take nearly 2-3 years to reach pre-COVID economic growth. The data for the July-September quarter will be released in the month of November and it already looks grim. The greater danger looms over the unskilled-middle class youth who will have to toil harder to find a job.