Congress leader Rahul Gandhi on Wednesday slammed Prime Minister Narendra Modi over the Chinese transgressions in Ladakh, steepest decline in the GDP since independence, rising unemployment and job losses, GST dues to states and a significant increase in COVID-19 cases across the country.
The Government of India on Monday announced the country’s biggest economic contraction in 24 years while the nation continues to sit on a COVID-19 pandemic bomb.
India’s National Statistical Office said the economy contracted 23.9% in the first quarter of the 2020-2021 fiscal year (which ended in June) compared with the same quarter of the previous year. This is the worst performance since the government began publishing quarterly GDP figures in 1996. And it’s the worst decline among the world’s major economies releasing GDP figures for that same quarter, according to the data from the Organization for Economic Cooperation and Development.
What did the IMF say about contraction of Indian economy?
Bharatiya Janta Party (BJP) tweeted an infographic on August 22 listing the projected Gross Domestic Product growth percentages in 2020 of nine countries (including India) and citing IMF as the source.
The infographic above shows the IMF predicting positive growth for India in 2020. However, most recent IMF data estimates negative growth for India. the IMF releases World Economic Outlook Reports twice a year—April and September/ October—followed two updates. ‘World Economic Outlook: The Great Lockdown’ was published in April which projected 1.9% and 7.4% growth for India in 2020 and 2021 respectively.
However, in June, the IMF released an update on the report—‘World Economic Outlook Update’. According to this report, “Economic data available at the time of the April 2020 WEO forecast indicated an unprecedented decline in global activity due to the COVID-19 pandemic. Data releases [released] since then suggest even deeper downturns than previously projected for several economies.”
In its June report, the IMF revised its April estimates and projected a contraction of -4.5% in 2020. “India’s economy is projected to contract 4.5 percent following a longer period of lockdown and slower recovery than anticipated in April,” the report stated.
Will declining GDP affect unemployment?
With the decline in GDP, debate over rise in unemployment (especially in COVID-19 pandemic) has come up.
As per Centre for Monitoring Indian Economy (CMIE), India’s current unemployment rate stands at 7.5 percent. The unemployment rate for graduates stands at 18.5 percent according to data for the end of 2019 compiled CMIE. The report was published for the period between September and December 2019 after interacting with 1.74 lakh households.
The report shows a substantial increase in unemployment rate in urban India, which stands at 9 percent compared to unemployment rate in rural India at 6.8 percent. The overall unemployment rate for females is at 17.5 percent versus 6.2 percent for males. In a more drastic increase, the unemployment rate is as high as 26 percent for urban females.