NEW DELHI: India’s unemployment rate rose to 7.78% in February, the highest since October 2019, and up from 7.16% in January, according to data released by the Centre for Monitoring Indian Economy (CMIE)on Monday, reflecting the impact of a slowdown in the economy.
India’s economy expanded at its slowest pace in more than six years in the last three months of 2019, with analysts predicting further deceleration as the global coronavirus outbreak stifles growth in Asia’s third-largest economy.
In rural areas, the unemployment rate increased to 7.37% in February from 5.97% in the previous month, while in urban areas, it fell to 8.65% from 9.70%, the data released by CMIE, a Mumbai-based private think-tank showed.
Prime Minister Narendra Modi’s government took several steps earlier this month to try to bolster economic growth, including increasing state spending on infrastructure.
But many economists expect the impact of those efforts to be outweighed by the global fallout from the coronavirus epidemic.
Modi’s government is targeting only a slight recovery in growth to 6% for 2020/21, far below the level needed to generate jobs for millions of young Indians entering the labour market each month.
Analysts earlier expected growth would pick up gradually driven by a favourable base effect, a cut in corporate tax rates last September and increased government spending.
But the central bank earlier this month warned that the downside risks to global growth have increased as a result of the coronavirus epidemic, the full effects of which are still uncertain and unfolding.
A spike in inflation to a more than 5-1/2 year high of 7.59% in January is expected to make the Reserve Bank of India hold off on further cuts in interest rates for now, while keeping its monetary stance accommodative.
