NEW DELHI: In its recent monthly economic review, Finance Ministry highlighted that the reassuring trend in employment. According to the report, Periodic Labour Force Survey (PLFS) indicates a decrease in unemployment from 3.6% in 2022 to 3.1% in 2023, along with an increase in the labour force participation rate.
The RBI’s KLEMS (K stands for Capital, L for Labour, E for Energy, M for Material and S for Services) database up to 2021-22 shows a revival in India’s labor market structure post-COVID, with notable growth in non-agricultural sectors. As per the KLEMS database, employment in the country increased by 8.2 crore in the five-year period from FY18 to FY22. Of this, 53% of employment was created in non-agriculture sectors, primarily the services sector.
The Annual Survey of Industries (ASI) highlights the resilience of the manufacturing sector, particularly in states like Tamil Nadu, Gujarat, and Maharashtra which have over 40% of India’s factory jobs . There’s a trend towards larger factories hiring more workers, signaling positive growth in employment quality. The food products industry remains the largest employer, but sectors like computers, electronics, and chemicals are showing significant employment growth, indicating a shift towards higher value-added manufacturing in India.
Driven by the government’s thrust on capex which has continued to crowd in private investment, Gross Fixed Capital Formation (GFCF) at constant prices registered a growth of 10.2 per cent in FY24 and 10.6 per cent in Q3 of FY24, as per the report. There has been a broad-based pick-up in investment, as reflected in the rising share of GFCF, which increased from 29.6 per cent in FY22 to 31.3 per cent of GDP in FY24.
“While robust investment activity is clearly underway, strengthening private consumption demand is evident from indicators like burgeoning air passenger traffic and sale of passenger vehicles, digital payments, improved consumer 23 confidence and expectations of a normal monsoon. Increased demand for residential properties in tier-2 and tier-3 cities augers well for furthering construction activity,” the report said.
India’s inflation outlook for the upcoming months is positive. Core inflation is trending downwards, indicating a broad-based moderation in price pressures. The pick-up in summer sowing is likely to help reduce food prices.