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LATEST NEWS UPDATES | Contraction of the Economy and the Impending Job Crisis -Satyaki Roy

Contraction of the Economy and the Impending Job Crisis -Satyaki Roy

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published Published on Sep 26, 2020   modified Modified on Sep 27, 2020

-Vikalp.ind.in

The sharp contraction of India’s GDP in 20-21 Q1 (April-June) of 23.9 per cent according to the quarterly estimates released by the National Statistical Organisation is a summary measure that need to be deconstructed to capture the ailing state of the Indian economy. The three sectors that suffered bigger contraction are respectively construction (-50.3%), trade hotels and restaurants (-47%) and manufacturing (-39.3%). Notably these are also the sectors that provided non-farm employment to those shifted out of agriculture in the past three decades. During the period 2000 to 2012, on an average yearly 7.5 million jobs were created in these sectors of which construction absorbed the largest share.

Non-farm jobs declined after 2012 and the annual average fell to 2.9 million till 2018. In a country like India where the employment challenge is primarily to provide jobs to the vast majority of unskilled workers, construction and retail trade played a significant role particularly when capital intensity in the manufacturing sector has been rising resulting in a steep fall in employment elasticity in the factory sector. In fact there has been a yearly contraction of 0.6 million manufacturing jobs in India during the period 2012-18 and mind that there was no pandemic situation that time. Therefore attributing the current contraction entirely to the pandemic would be imprudent and this further explains the fact that although major countries of the world are facing the same mega-health crisis but India recorded the biggest contraction within the G-20 group. The ‘act of God’ only aggravated what resulted from the act of earthly beings!

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Vikalp.ind.in, 26 September, 2020, https://vikalp.ind.in/2020/09/contraction-of-the-economy-and-the-impending-job-crisis/?fbclid=IwAR24Y3qA-UYLRn_EP8ozoLpAJcPQM_R_zb3idFu_RsiWwdTMEzvLFQxXUsw


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