Job losses are set to spike in May after rising sharply in April as strict lockdowns were imposed in most parts of the country to prevent the spread of Covid-19 cases during the second wave.
The second wave of Covid-19 appears to have done more damage than predicted. Smaller businesses, including micro, small and medium-sized enterprises, are laying off more employees as demand and sales have declined due to local lockdowns.
It should be noted that 98 percent of the country is under lockdown in some form, resulting in a decline in employment in rural and urban areas.
Reading | The Lockdown Blues: How the Second Wave Affected the Indian Economy
The Center for Monitoring Indian Economy, a Mumbai-based think tank, recently said the unemployment rate in the country has reached a four-month high Over 70 lakh jobs are affected.
UNEMPLOYMENT IS RISING
Job losses are likely to increase in May as the situation in Covid-19 has not improved much. India is A huge volume of daily cases is still reportedThis indicates that the lockout can last at least a month.
In such a scenario, unemployment in smaller industries could see bigger spikes this month. In April the unemployment rate had reached eight percent and was up 1.5 percent from March.
CMIE had said future employment prospects remain weak due to restrictions in major cities like Delhi, Mumbai, Chennai and Kolkata.
One of the biggest concerns that emerged during the second wave is an increase in urban unemployment, which has approached 10 percent. While the current wave of job losses has affected informal and gig economy workers, tighter restrictions are likely to affect formal jobs if the situation does not improve soon.
WORSENING ECONOMIC OUTLOOK
Not only unemployment, but also various other indicators suggest that the second wave weighed more heavily on economic recovery.
Several international brokerage firms and rating agencies have downgraded India’s economic outlook, citing the longer-than-expected impact of the second wave.
S&P Global Ratings said in a recent note that “India’s second wave of Covid could yield up to 2.8 percentage points of GDP growth”.
The impact of the second wave could hurt India’s “promising rebound in economy, earnings and credit metrics so far this year”.
Also read | Second wave of Covid infections could jeopardize India’s economic recovery, S&P says
Some experts now say that the slowdown triggered by the second wave could last through the first quarter and lead to a decline in annual GDP in FY22.
Brokers like S&P Global suggest that India’s FY22 annual GDP could be below 10 percent in the event of a moderate or severe downside scenario. In a moderate scenario, the annual growth could be 9.8 percent and in a severe scenario a little more than 8 percent.
Right now, the only solution to revitalizing the economic recovery is to quickly reduce the number of infections. Getting vaccinated faster is one way to achieve the goal.
However, India’s limited vaccination rates and exposure to a more infectious variant of Covid-19 have hurt the economy and could leave a permanent scar if authorities don’t step up their efforts to contain the second wave.
Also read | Covid-19: 6 factors that could affect India’s economic recovery
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