The soaring unemployment rate, which touched 8.3 percent in December, should be a matter of concern for the policymakers as India enters 2023 with hope and expectations of a rebound in the economy. The December unemployment rate was the highest in 16 months. According to data published by the Centre for Monitoring Indian Economy (CMIE), the unemployment rate fell to 6.4 percent in September – which was attributed to hiring around the holiday and festive season – but it rose steadily after that, to 7.8 percent in October and 8 percent in November. Among the states, Haryana’s unemployment rate stands at a staggering 37.4 percent, while it is 28.5 percent in Rajasthan and 20.8 percent in Delhi.
This trend, coupled with the warning by the International Monetary Fund that a third of the world would be hit by recession in 2023, presents a sobering prognosis for the immediate future. Though India is one of the fastest-growing economies in the world, the fact remains that jobs have not been created at a steady pace and exports have fallen. Micro, small, and medium enterprises have been struggling since 2016, as is borne out by the fact that the unemployment rate was about 5 percent five years ago as compared with 8.3 percent now. As the global economy stares at possible recession, India, being part of the globalised world order, may not be able to completely escape the spillover effects. Even before Covid-19 struck, India was facing high inflation and had eight successive quarters of falling growth, unlike developed countries that saw inflation spiralling only post-Covid and the Russia-Ukraine war.
As a result, India’s journey back to normal growth would be a more daunting task. Overall, the picture does not inspire much confidence. The government will have to come up with innovative economic policies.