Editorial: Long way to go
While the Indian economy is on the path of overall recovery from the worst hit it took at the start of the pandemic, the situation remains volatile in the face of the rapid surge of the Omicron variant and the informal sector continues to be in the red. What is more worrying is the rising unemployment in the country. The jobless rate increased to 7.91% in December, up from 7% in November, and representing a four-month high. Both the urban and rural areas are reeling under the unemployment crisis, according to the data from the Centre for Monitoring Indian Economy (CMIE), a private research firm. The surge in unemployment signals sustained risks to the economy. In India, where about one million people enter the job market every month, although economic growth has rebounded from the depths of the crisis, unemployment has stayed well above 6%. Against this backdrop, any expectations of a quick recovery must be tempered in tune with ground realities. Several parameters — inflation, unemployment, subdued private consumption and investment, and a crippling informal sector — are still in the red zone and the economic recovery path is going to be long and arduous. In terms of industry break-up, manufacturing, capital goods and durables are all below their pre-pandemic levels, while electricity, intermediate goods and infrastructure had seen strong growth. With more States imposing fresh restrictions to check the surge in Covidcases, experts have estimated that growth might be impacted by up to 0.30% in the January-March quarter.
The slowdown could be worse than expected as economic activity is bound to take a hit in view of the restricted inter-State and intra-State movement of people. The sharp rise in the caseload has prompted several States to enforce curbs such as night curfew and allowing restaurants as well as offices to operate at half capacity. The experience of the first and second waves shows that lockdowns have caused irreparable damage to millions of livelihoods. India’s economy shrunk by a staggering 24.4% in April-June 2020 when the world’s most stringent lockdown was in force. The second wave was far more devastating than the first, but the curbs were mostly short-term. With economic activity almost returning to pre-Covid levels, the April-June 2021 quarter witnessed a GDP growth of 20.1%, though the low base of the year-ago period helped paint an over-optimistic picture. The Centre must take a realistic and pragmatic approach while preparing the Budget. Supporting growth should be the priority with a major focus on special measures to stabilise growth through supportive fiscal policies, improving farm prices with aggressive Minimum Support Price (MSP) hikes and food subsidies. Similarly, there must be increased spending on healthcare and education, boosting rural income through rural infrastructure and job creation.
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