NEW DELHI: India’s unemployment rate rose to 7.78% in February, the highest since October 2019, and this may rise further if the economy continues to suffer because of supply chain disruptions arising from the coronavirus contagion.
Data released by data analytics firm CMIE on Monday showed urban unemployment at 8.65% and 7.37% in rural areas, implying joblessness is widespread.
“It underlines the fact that the unemployment situation continues to be grim and if the economic situation worsens due to supply disruptions on account of the coronavirus contagion, employment figures could be worse,” said Prof Ravi S Srivastava, former Chairman of the Centre for Regional Studies, Jawaharlal Nehru University.
The worrisome unemployment figures come in the backdrop of GDP growth dropping to a nearly 7-year low of 4.7% in December 2019.
Global fears that the coronavirus outbreak may disrupt the supply chain for many nations, including India, in vital sectors such as pharmaceuticals, automobiles and electronics, means GDP growth is likely to fall, again.
“Alarm bells are ringing for Indian producers as COVID-19 outbreak poses threats to exports and supply chains. Businesses became less confident about the year-ahead outlook for output, in turn restricting hiring activity,” said Pollyanna De Lima, principal economist at IHS Markit.
Higher joblessness also translates into lower demand for goods and services. It would have its own impact on the current slowdown in economy.
No positive signs for Indian cos
India Inc., reported a decline in both sales and profits for the quarter ended December 2019, with sales falling 1.2 per cent and gross profits by 10.8 per cent, implying margins sharply declined as companies tried to push sales.