- The quarterly 02 GDP growth data released recently indicates the Indian economic scenario is on the mend after struggling through harrowing times when the pandemic was raging relentlessly. Most hearteningly, the July-September quarter GDP data shows that the aggregate economic output has just crossed the 2019 level, the pre-Covid benchmark. Undoubtedly, there is no good reason to believe that the economy has recovered to its pre-Covid level ushering in cheer to all depressed sectors. Nonetheless, the relief on this count should be muted as there is mounting evidence that the country is witnessing two contrasting trends much to the concern of the government authorities and the economists alike struggling to further revive the economy.
PC: NewsDirect
- As reported, aggregate output is on the upswing but India’s workforce is still struggling on many counts. Unless it is addressed resolutely, Covid is bound to take a permanent toll on a section of the workforce most vulnerable from staying afloat whilst facing the challenges of survival. The Government of India recently released the urban employment data for January-March 2021 and a striking feature is that while jobs lost during the first lockdown were recouped, it happened mainly in the informal sector. Some soul searching on the matter would be most revealing here. Between January-March 2020 (pre-Covid quarter) and January-March 2021, the proportion of salaried jobs in the total shrank from 50.5% to 48.1%.
- In it place, the proportion of jobs in casual labour and the self-employed increased to make up the majority of jobs. As can be inferred, there is a palpable shift towards informality. The salience of this data comes from two aspects. In terms of sentiment, the January-March 2021 period was definitely upbeat. Also, the data shows that both the proportion of the population in the job market and workers with jobs in the first quarters of 2020 and 2021 were at a level too. Eight months have passed since the said data was collected and the proxy indicators reported suggest that India’s workforce is yet to recover fully. Needless to mention, an increase in the proportion of jobs in the informal sector risks India’s long-term growth story thereby indicating our workforce is yet to put behind the Covid impact in the desired manner.
PC: MAKHTAR DIOP
- As widely reported, private consumption is still below the pre-Covid level, suggesting a section of the workforce is yet to recover fully. The fundamental technological change sweeping across demands a lot of upskilling on the job. As such, jobs shifting out of the formal sector will render the upskilling process an uphill task to embrace. It makes imminent sense for the economic policymakers to look beyond to gauge the extent of damage caused by Covid which must be initiated by the Union Government and States, the two most important stakeholders. Immediate attention must be to relook at fiscal policy to arrest the shift in jobs to the informal sector. Mind you, it is the quality of human capital that will ultimately decide if India makes full use of its enormously gifted demographic dividend.
