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Post at: Aug 06 2021

‘Menace of Rising Unemployment in India

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).

Background

  • 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

Way forward
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.

Long-term measures

 

  • 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.

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