As India is grappling with a public health crisis in the wake of a devastating second wave of the Covid-19 pandemic, the growing unemployment rate is further adding to the miseries. At a time when there is a talk about the imposition of nationwide lockdown to tame the virus, data pertaining to job losses and the collapse of small businesses reflect a grim scenario and highlights how another full-fledged lockdown at this juncture could prove disastrous for the economy. The latest figures suggest that the unemployment rate has risen to a four-month high of nearly 8% in April with more than seven million jobs being lost. What is more alarming is that joblessness is more acute in urban areas as workers are returning to their native villages. The Centre for Monitoring Indian Economy (CMIE), a private research firm, has predicted a gloomy picture because the process of economic recovery is severely hampered by a massive surge in the number of fresh Covid-19 cases and the crisis gripping an already creaky healthcare infrastructure. The pressure to contain the spread of the virus might prompt many States to impose fresh restrictions, leading to further stress on the economy. The weak employment outlook is a risk for India’s chances of reaching double-digit economic growth this year. Many economists have already lowered their projections, while several are warning of possible reductions if provincial curbs are extended further. The slowing pace of vaccination is also hurting the country’s recovery prospects.
There are worries that the impact of India’s sinking economy will go beyond its borders and result in slowing down the global economic recovery. India is the fifth largest economy in the world and contributes significantly to world economic growth. Though there were expectations earlier that both the Indian and global economy will see a great rebound in 2021, such optimism has virtually evaporated now. Even in early 2020, before the spread of the pandemic, the International Monetary Fund (IMF) had cited India’s indifferent output as the main reason for sluggish world growth figures in 2018 and 2019. The IMF downgraded its 2020 forecast to 5.8% partly because it expected more of the same from the subcontinent. Given the magnitude of the crisis in India, international restrictions are expected to remain in place for a longer period than expected. This is certainly bad news for the airline industry, already gasping for breath, and will have a large dampening effect on global economic growth. Another looming crisis emerges from the fact that vaccine exports from India, which produces nearly 70% of the global requirement, have now been put on hold or cancelled owing to the worsening domestic situation. India’s crisis has thus become a global crisis.
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