Unemployment crisis in Indian cities – The Diplomat

Pacific money | Economy | South Asia

The urban unemployment crisis caused by the COVID-19 pandemic continues to undermine the Indian economy.

In India, in addition to day laborers, people from the middle class and even from the upper middle class experience unemployment. This is because unemployment in Indian cities has risen gradually since the start of the pandemic.

According to the Indian Economy Watch Center, an independent think tank, the urban unemployment rate was above 9 percent in December last year, a figure that is alarming for a country where most of the high-paying jobs are found in cities.

The unemployment crisis in India is not only this, which has spread like a cancer in almost every industry. Take, for example, the automotive industry. This industry was successful in Indian cities before the pandemic, creating many jobs.

However, sales in the auto industry have remained low since the start of the pandemic. Car shops selling vehicles or auto parts closed one by one. Consequently, people working in this industry lose their jobs, which contributes to the growth of urban unemployment in particular, and general unemployment in the country as a whole.

Indian micro, small and medium enterprises contribute half of the country’s exports. These businesses contribute 30 percent nominal GDP; They represent 95 percent industrial units. Unfortunately, the pandemic has devastated these businesses, hitting all sectors of the Indian economy.

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Last December, Narayan Tatya Rane, India’s Minister of Micro, Small and Medium Enterprises, published an online survey stating that 9 percent of these businesses had to close due to the pandemic. Another survey conducted earlier in May 2021 among 6,000 of these businesses, as well as startups, found that 59 percent of them planned to close, downsize or sell their business by the end of 2021.

Micro, small and medium enterprises employ 110 million people, making them one of the largest players in the Indian job market. As these businesses close or downsize their businesses, unemployment among workers is rising exponentially. Consequently, an increasing number of workers, who usually live from hand to mouth, cannot find work. Many are forced to roam the streets in search of food and shelter.

It is unlikely that India will be able to reduce the unemployment rate in the near future due to the closure or reduction of micro, small and medium-sized enterprises that employ millions of people across the country. This has led to an increase in unemployment in cities, where almost all of the highest paying jobs in the country are concentrated.