India Lockdown Impact: Unemployment Rate Spiked Over 23 Percent

Karamchand Rameshwar - Apr 09, 2020

India lockdown is necessary to control the COVID-19 outbreak, but it also leaves a detrimental effect on the country's economy.

The Indian government has started the nationwide lockdown since 25 March due to the COVID-19 outbreak. We all have predicted a significant impact of this lockdown on the Indian economy. According to the report of the think-tank Centre for Monitoring Indian Economy (CMIE), the employment rate in Indi has dropped to an all-time low of only 38.2% last month.

Lsleadchart 1586202606028 — India lockdown impact - the same issue many other countries are also facing.

It seems like the India lockdown is hitting the country’s economy really hard and the unemployment rate is one of the first indications. CMIE report suggests that the overall unemployment rate in India has increased to a whopping 23% in the last week. Meanwhile, the unemployment rate in the urban area is estimated to be around 30.9%.

The report stated that “the fall since January 2020 is particularly steep – almost spectacular. It seems to have nosedived in March after having struggled to remain stable over the past two years. Then, there is a precipitous fall.” In addition, CMEI report also showed that the labor participation rate was 41.9% last month in comparison to 42.6% in February, suggesting that the drop even happened before the nation lockdown.

Based on the rate, around 50 million people in India might be unemployed in the two weeks of the nationwide lockdown, according to former chief statistician of India Pronab Sen.

“Since some may have just been sent home, for now, the actual scope of unemployment may be even higher and may show up a little later," Sen added.

India doesn’t have a really reliable and official high-frequency data on the employment rate. The data of CMIE has been the center of a political slugfest in the past, with Indian government officials being skeptical about its survey methodology. However, the 23.4 percent figure is somewhat expected, according to Himanshu, associate professor of economics at the Jawaharlal Nehru University, Delhi.

Not just India, many other countries are also facing a similar problem due to the COVID-19 pandemic. Around 10 million workers in the US filed for unemployment in the last few days.
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