Amidst the exponential rise in COVID-19 cases, the decision of reopening services for the revival of the economy sparked up many debates in the country.
While some people were deeply worried that the unlock would result in even more infections, others identified it as a necessary move to recover our economy, which was in shambles.
As it turns out, Unlock 1.0 proved a blessing for our economy and market. The unemployment rate has decreased worldwide, as the services eventually open, bringing hope in the otherwise distressing time.
Signs Of A Revived Economy Bring Positivity In The Market
In a mere span of seven days, international investors have invested around 3 billion US dollars (equivalent to 23 thousand crore rupees) in the Indian stock market.
This comes as a piece of very positive news because for 2 months before this, i.e. April-May, the investors were only withdrawing money due to the uncertainty looming over businesses.
According to the experts, the investors have shown confidence in the economy post lockdown. This is reflective of a better future for our country’s economy, which had been going through a lull all this while.
Unemployment Rate Falls Sharply In Urban Areas
Our country had been in lockdown since March 25 in the wake of the COVID-19 pandemic, which halted many international markets as well.
During this period, the unemployment rate in India went up as high as 27%, and certain states had to bear the brunt of it even more. Jharkhand witnessed an abnormally high unemployment percentage of 59.2%.
This was a great cause of concern among economists and the youth who were looking for career opportunities. However, in Unlock 1.0 a ray of hope has emerged with the unemployment rate dropping by approximately 8% in just a week.
As the unlock eased in many parts of the country, the urban unemployment percentage which stood at 25.14% on May 31st improved marginally and fell to 17.08% on June 7th, as per the data provided by CMIE (Centre for the Monitoring of Indian Economy).
This is the lowest figure recorded in 11 weeks. A further decline is expected as more services, especially the ones in the hospitality sector, resumed operations from June 8th.
Both the national and rural unemployment rates were marked higher than the urban one and stood at 17.51% and 17.71% respectively.
An increase of 5.5 million in jobs was recorded in May after a huge loss of 20.2 million jobs in the month of April.
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Few Causes Of Worry
Undoubtedly, the dip in the unemployment rate is indicative of a better economy. But, at the same time, we should not raise our hopes too high as this number is expected to be stagnant for a while because a large number of small businesses have decided to close down (permanently or temporarily) or cut down jobs.
The percentage of families involved in self-employment or small businesses has also seen a decline of 0.5% in the financial year 2019 compared to 2018.
Praveen Jha, a professor of economics at the Centre for Economic Studies and Planning at JNU, suggests that the economic recovery would see a U-shaped curve, rather than a V-shaped one. Hence, job gains would not see a stable increase in the near future.
The situation is believed to get better within two years.
Condition Of Rural India
The drop in the urban unemployment rate has surely provided relief from the ongoing crisis, but unfortunately the same cannot be said for the rural areas, where the unemployment rate is at a constant of around 18%.
According to experts, this would result in an increased demand for the jobs under MGNREGA scheme.
The end of the crop-sowing season would add more woes to the present situation as this means that more people would go out of jobs.
Nevertheless, the decline in the unemployment percentage is a good sign for our country. Sure, it does not guarantee the end of all our problems but it is a promising first step to a better economy.
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Sources: Hindustan Times, Livemint, BloombergQuint
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