Unemployment rate reached 43-month high, growth rate too slow

Unemployment reached an all-time high of 43 months in March, just before the lockdown to curb the spread of the corono virus epidemic in the country. This information was given by the Mumbai-based Center for Monitoring Indian Economy (CMIE) on Tuesday (April 7, 2020). The unemployment rate (or the share of unemployed people in the economy) in March was 8.7 percent, the highest since September 2016. In January this year, the rate was 7.16 percent. This report related to unemployment comes at a time when 21 days of nationwide lockdown is in force in India.

According to the CMIE report, labor participation (LPR) fell below the 42 per cent mark for the first time. LPR is a gauge of active workforce. The labor participation rate was 41.9 percent in March and the employment rate was 38.2 percent. Both are at their all-time low. Mahesh Vyas, the head of the think tank, said that LPR started declining in March after struggling to stay stable for the last two years.

According to CMIE, labor participation rate declined by one percent between January and March. It was 42.96 percent in January, which fell to 41.90 percent in March. This happened because the number of people employed decreased from 41.1 crores to 39.6 crores while the number of unemployed increased from 32 crores to 38 crores.

According to the news published in NDTV, Vyas says that the labor figures for March 2010 are very worrying and for the last two weeks it has been much worse. He said that due to the nationwide lockdown to prevent the spread of the corono virus, we feared a decline in the labor participation rate. But this fall occurred even before the lockdown. It gets worse when we go into lockdown.

It is noteworthy that the lockdown in the country started from 25 March but before that the economy of the country was suffering from a long period of slow growth in the financial year 2019-20. Official estimates suggest that the annual growth rate of GDP is 5 percent, the slowest since the 2008–09 global financial crisis.