Editorial: Challenging days ahead
Though India is one of the fastest growing economies, the fact remains that jobs have not been created at a steady pace.
Published Date – 12:45 AM , Thu – 5 Jan 23
Though India is one of the fastest growing economies, the fact remains that jobs have not been created at a steady pace.
flying Unemployment The rate, which reached 8.3% in December, should be a matter of concern for policymakers as India enters the new year with hope and expectations of a rebound in the economy. December’s unemployment rate was the highest in 16 months. According to data published by the Center for Monitoring Indian Economy (CMIE), the unemployment rate fell to 6.4% in September – attributed to hiring around the holiday and festival season – but then rose steadily in October. increased to 7.8%. 8% in November. Among states, Haryana has an unemployment rate of 37.4%, compared to 28.5% in Rajasthan and 20.8% in Delhi. This trend, combined with the International Monetary Fund’s (IMF) warning that a third of the world will be in recession in 2023, presents a dire forecast for the immediate future. Although India is one of the fastest growing economies in the world, the fact remains that jobs have not been created at a steady pace and exports have fallen. Micro, Small and Medium Enterprises (MSME) have been struggling since 2016, as evidenced by the fact that the unemployment rate, which was around 5% five years ago, now stands at 8.3%. As the global economy stares at a possible recession, India, being part of a globalized world order, may not be able to completely escape the spillover effects. Even before the arrival of Covid-19, India was facing high inflation and falling growth rate for eight consecutive quarters unlike developed countries which saw inflation rising only after Covid and Russia-Ukraine war.
As a result, India’s journey back to normal growth will be a more difficult task. Overall, the picture doesn’t inspire much confidence – the country’s current account deficit hit an all-time high of $36.4 billion in the July-September quarter, the trade deficit with China widened to a record high and the rupee had a bad year . 2022 US Dollar from Rs 74.33 to Rs 82.72, a decline of 10.14%. All this suggests that India could be heading for another tough year. IMF projections suggest that global growth will slow to 2.7% in 2023 from last year’s 3.2% and 6% in 2021. In such a situation, all central banks are moving towards a tight lending rate zone which will further slow down global growth. Manufacturing in India continues to falter. Factory output as measured by the Index of Industrial Production (IIP) fell to a 26-month low in the festive month of October. Core sector growth was just 0.1% in October, the slowest in 20 months. This has led to a sharp downgrade of India’s growth estimates for the next fiscal by analysts. The distress among MSMEs continues, reflecting a deep crack in industrial reform.