Chennai
The GDP for the quarter was pegged at Rs 35.73 lakh crore which is higher by 0.33% compared to the GDP of the corresponding period in 2019-20. Observers took it as an encouraging sign that the economy might have bounced back in a matter of two years and hit pre-COVID levels. And there seems to be data to back these expectations too. The growth engines were narrowed down to a few key sectors — agriculture, mining, electricity, along with forestry, fishing, gas, and utility services. However, skepticism regarding the extent of this growth came from a few economists who remarked that the growth was uneven. For instance, construction, non-financial sectors, non-public services and manufacturing remain a pain point since the pandemic began. Traders and operators in the hospitality business are yet to show signs of major improvement.
In September, industrial production had contracted by over 2% due to bottlenecks in the supply chain. The sales of cars and two-wheelers had also dipped over 25% in October when compared to 2019 figures, and it’s a 10-year low for the industry. On the other hand, the services sector, a highly contact centric ecosystem, which employs millions within the informal economy is yet another casualty that lags behind. The impact of this is visible in the quantum of private consumption, which in the July-Sep 2021 quarter was estimated to be Rs 19.48 lakh crore, 3.5% lower than the level recorded in the pre-COVID period in 2019. One must also acknowledge the elephant in the room — unemployment. The quarterly bulletin of the Periodic Labour Force Survey, launched by the National Statistical Office (NSO), recently contextualised economic progress within the framework of joblessness.
The report said urban unemployment rates in all age groups in 11 states remained in the double-digits. The rate of joblessness in the age group 15-29 hit 22.9% across all states in the Jan-Mar quarter of 2020-21. Tamil Nadu was ranked ninth on this list, whereas Gujarat had the lowest urban unemployment rate of 3.8% followed by West Bengal. The cause for high unemployment among the youth was narrowed down to the crunched labour market which needed older workers who need not be trained from scratch. A major disruptor was COVID-19, that derailed millions of jobs.
Another point of concern is the slow rate of job creation and employment, which impacts demand. According to the Centre for Monitoring Indian Economy, dips in employment rates discourage fresh investment. And without fresh investments, it’s impossible to generate employment too. The government’s hesitation in embarking on big spending has also been zeroed in as a causative agent for the uneven growth. A prime example is the 65% growth in tax collections this year which has been offset by growth in government expenditure that stops short of 10%. This is not to imply that the Centre has sidelined economic stimuli altogether. Last month, the government had announced the disbursal of an additional $6.3 bn to States, as part of infrastructural spending. A whole chain of privatisation efforts has also begun, which involves airports, railway stations and stadiums, entailing a stake sale to the tune of $81 billion.
These developments are transpiring in the backdrop of the Omicron spread, and nagging inflation — which hits fuel and veggie prices. India cannot afford to curtail economic activity on any front, although it could be affected by the vagaries of the global economic response to Omicron. For now, we must focus on getting the other 50% of the nation vaccinated, as all-around immunity could be the springboard from which India can steady itself into the next phase of growth. Until then, it might be necessary to calibrate our expectations.
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