Editorial: Shattering livelihoods
Manufacturing and tourism sectors have borne the brunt of the coronavirus pandemic over the past two years. In the tourism sector alone, about 2.15 crore people have lost their jobs due to the three waves of the pandemic that crippled the economy. Considering an average household size of five members, these job losses have adversely […]
Manufacturing and tourism sectors have borne the brunt of the coronavirus pandemic over the past two years. In the tourism sector alone, about 2.15 crore people have lost their jobs due to the three waves of the pandemic that crippled the economy. Considering an average household size of five members, these job losses have adversely impacted over 10 crore people in the country. In the manufacturing sector too, the situation is pathetic as several small and medium enterprises shut their businesses. According to a study conducted last year by the Centre for Monitoring Indian Economy (CMIE), the number of employees in this sector dropped from 5.1 crore in 2016-17 to 2.73 crore in 2020-21— a 46% fall in just half a decade. However, there is hope that the tourism industry will see a turnaround soon since the third wave of the pandemic has subsided and the vaccination coverage has steadily improved across categories. An interest-free loan of Rs 10 lakh is being given to travel and tourism stakeholders and up to Rs 1 lakh to tourist guides to help them tide over the crisis. But, this is not enough to recoup the losses and revive jobs. With the services sector accounting for over 50% share of India’s GDP, it is essential to bring domestic and international tourism back on track with the generation of adequate employment opportunities. Despite much fanfare, the ‘Make in India’ initiative has largely failed to revive the manufacturing sector.
India’s post-Covid economic recovery will remain sluggish unless sustained efforts are made to rev up these sectors. Along with growing unemployment, retail inflation is another area of serious concern. The retail inflation, measured by Consumer Price Index (CPI), was 6.07% in February. For the second straight month, it was higher than the upper tolerance band of 6%, which guides monetary policy decisions. The changing global geopolitical events, in the wake of the Russian invasion of Ukraine, are bound to impact the inflation forecasts and the next RBI monetary policy meeting scheduled in April is expected to take into consideration the evolving scenario. The most important area of impact will be the price of crude oil. There is a need for the Centre to lower fuel taxes to ring-fence the economy from a demand shock. Food inflation is also expected to increase further due to supply bottlenecks and adverse weather conditions on the back of the waning base effect. While the economy has been showing signs of revival, the first advance estimate of the GDP for the current fiscal shows that it has barely reached the pre-pandemic level. In some contact-intensive sectors, the revival has been slow and is yet to reach the 2019-20 level. These are the sectors that are employment-intensive, and two years of continuous drag has created a huge burden of unemployment.
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