India’s record unemployment spike

Unemployment reaches 45-year high

According to a leaked government report, India’s current unemployment rate has hit 6.1 per cent – the highest it’s been in 45 years. This was further confirmed by recent survey data released by India’s National Statistics Office, which shows that the unemployment rate among young urban job seekers is at 23.7 per cent – and has been on the rise for three consecutive quarters.

What next for PM Modi? . . .

This ‘economic expectation vs. reality’ has been bogging down Prime Minister Narendra Modi since he assumed office in 2014. His then-historic victory was predicated on bolstering India’s economy by cutting red tape and attracting FDI, such as the ‘Make in India’ campaign. His extensive global travel was also intended to attract global investors and to develop new free trade agreements. However, the two largest economic reforms during Modi’s first term, de-monetization and the introduction of a new sales tax, largely backfired as they negatively impacted poorer populations and micro, small, and medium enterprises (MSMEs).

The urban and rural picture . . .

Unemployment is impacting both young urban job seekers and rural populations. To appease growing discontent among farmers, in February the government promised 750 billion rupees (about US$10.5 billion) in income support schemes for farmers and other measures related to infrastructure and employment. MSMEs were also promised that they will receive government pensions and better access to financial instruments and loans. If Modi fails to halt rising unemployment, India’s economic transformation may be under threat.