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Rural unemployment has nearly doubled in a week as lockdowns and surging covid infections in villages brought economic activity to a halt. A lull in farming is adding to joblessness.

Rural unemployment shot up to 14.34% in the week ended 16 May from 7.29% in the week ended 9 May, data from the Centre for Monitoring Indian Economy (CMIE) showed. Rural unemployment is at a 50-week high: the last time it was higher was nearly a year ago, in the week ended 7 June.

Similarly, urban unemployment climbed to 14.71%, three percentage points more than a week ago, while the national unemployment rate soared to 14.45% from 8.67%, highlighting a jobs crisis amid the second covid wave.

Sharp climb
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Sharp climb

Economists said the high infection rate and lack of employment opportunities in urban clusters due to lockdowns forced people to leave for their villages. But in rural pockets, there aren’t enough income opportunities. Besides, rural lockdowns and curfews have left people jobless both in formal and informal sectors, and a lull in farm activity in May is adding to joblessness.

“The urban houses and rural hamlets have got infected with the coronavirus this time. Unorganized manufacturing in rural and semi-urban India has largely come to a halt. This is increasing unemployment across India both in the formal and informal sector," said Santosh Mehrotra, a labour economist and retired professor of Jawaharlal Nehru University.

“The MSMEs (micro, small and medium enterprises) are in bad shape, and the informal jobs market, as well as self-employment in rural India, are in turmoil. The situation may get worse over the next few weeks if we don’t manage to tackle the pandemic in rural India. There is a demand shock, there is a supply chain constraint, and there is income loss—it’s a critical situation for any economy and labour market," Mehrotra said.

Chandrakant Salunkhe, president of SME Chamber of India, agreed. “Thousands of MSMEs have closed down in the second wave. There is a demand crunch, and companies to whom we supply are not taking orders, which means products are on hold, as are payments.

“Then there is an increase in raw material prices, which is impacting our business. The revival of MSMEs will improve the job sector, but that may not happen for months," said Salunkhe, also the managing director of Salunkhe Packaging Industries in Maharashtra.

“A lot of workers have left for their hometowns from industrial pockets like Pune, Mumbai, and Aurangabad, and from the industrial clusters of Gujarat, Karnataka and other places. So, it’s a crisis for them as well," he said.

Arup Mitra, a professor of economics at the Institute of Economic Growth in Delhi, said the country is “observing high unemployment rate, high under-employment, low productivity, and low-income capacity, across rural pockets, and all over the country."

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