Unemployment Spikes to 8% Due to COVID-19 Second Wave

Nationwide lockdown and limitations on mobility induced due to the COVID-19 pandemic have resulted in millions of people losing their jobs. India recorded an unemployment rate of 7.97% in April which is a four-month high in comparison to what it was in March (6.5%), February (6.89%) and January (6.52%) this year. A spike in the unemployment rate has been seen both in urban and rural areas.

In urban areas, the unemployment rate stood at 9.78%, the highest in eight months. In rural areas, the unemployment percentage stood at 7.13%, the highest in four months. The Labour Participation Rate (LPR) stood between 40.5% and 40.6% during December, January and February this year; however, in March, LPR dipped to 40.2%.

Given the COVID-19 pandemic, India recorded the highest monthly unemployment rate of 23.52% in April last year. It dipped to 21.73% in May 2020, 10.18% in June 2020 and then to 6.5%, the lowest in November, before spiking again to 9.06% in December.

There has been a decline even in the number of jobs available due to the periodic lockdowns. As the situation is still grim and tensed with the scarcity of medical resources, the situation will probably remain tense in May as well.

The weak employment situation this year proves to be a risk for India reaching its double-digit economic growth. Many economists have already lowered their anticipation, although various economists are intimating feasible reductions if provincial curbs are prolonged further.

For any clarifications/feedback on the topic, please contact the writer at bhavana.pn@cleartax.in

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