Why in News
- On 31 July, 2021, Centre for Monitoring Indian economy (CMIE) said India stands at 7.01 unemployment and 10 million job losses in May, 2021 due to second wave of COVID-19.
- Recently International Labour organization said India’s unemployment rate rose to 7.11% in year 2020 (highest in 3- decades).
- Even before the COVID-19 crisis, India had been experiencing slower economic growth and rising unemployment.
- The problems were dramatically worsened by the pandemic and lockdown.
Implications of Rising Unemployment
- Reduced economic demand – Recent government estimate show that India’s GDP contracted by 7.3% in 2020-2021.
- Rising in poverity levels – Pew Research India study/report says the number of people who are poor in India (with Income of $2 or less a day) to have increased by 7.5 crore because of COVID-19.
- Criminal activity is on the rise –
- Nutritional deficits – Poor household cut their food intake due to coping of unemployment.
- Gender gaps – Women leaving the labour market can lead to long term increases in already large gender gaps.
- Rising inequality – Oxfam report has highlighted wealth of Indian billionaires increased by 35% during lockdown.
Measures taken by the government
- Pradhan Mantri Garib Kalyan package and Atmnirbhar Bharat amounting to INR 20 trillion (Around 10% of GDP).
- Increased allocation of MNREGA to Rs. 40000 crore with increase wage.
- Unemployment allowance under Atal Beemit Vyakti Kalyan Yojna (ABVKY) has been enhanced from 25% of the average salary drawn to 50%.
- Online public employment services
Short term measures
- Launching a pilot urban employment programme in worst hit districts specially focus on woman workers.
- Protecting large enterprises from bankruptcies and mass layoffs.
- Alleviating the distress caused by unemployment- Eg- free distributions of grains, monetary benefits etc.
- Address declining demand and speed up recovery.
- Eg. – Need of National employment policy.
- Tapping potential of Digital economy (Industrial 4.0).
- Reskilling and upskilling of worker.