Unemployment, Inflation Continue To Worry Urban Indians

In urban India, the top concerns remain unchanged, with unemployment (33 per cent), inflation (31 per cent), corruption (21 per cent), crime and violence (20 per cent), and poverty and social inequality (19 per cent) continuing to dominate the worry list, according to a survey report by Ipsos. 

The report titled 'what worries the world global survey found that urban Indians reported a slight decrease in concerns about unemployment, inflation, financial and political corruption, and crime and violence, with percentage changes of -6 per cent, -7 per cent, -1 per cent and -1 per cent, respectively.

Notably, global worries largely hovered around inflation (32 per cent), poverty and social inequality (31 per cent), crime and violence (29 per cent), unemployment (27 per cent) and financial and political inflation (24 per cent). In India, unemployment has created major issues especially for its youth and opposition parties have slammed the government several times on the same issue. 

In March this year,  the International Labour Organisation (ILO) in a report stated that the unemployment rate of Indian youths is higher than for adults. The youth unemployment rate has been rising over the past several decades– from 5.6 per cent in 2000 to 6.2 per cent in 2012 and then increasing threefold, to nearly 18 per cent in 2018 and reaching around 15.1 per cent in 2020

Earlier, an ILO report had revealed that the youth unemployment rate has been rising over the past several decades and noted that unemployment among educated youth was particularly high and had exceeded global averages by 2018 to create more jobs by investing in infrastructure development, promoting entrepreneurship and by providing skill development programmes.

After expressing its concerns about a report of the ILO, the Modi government has questioned a Citigroup report, which revealed that India “will struggle to create sufficient employment opportunities” even with a 7 per cent economic growth rate. The Union Ministry of Labour and Employment said that the report fails to consider the positive trends and comprehensive data from official sources, such as the Periodic Labour Force Survey, the Reserve Bank of India and the Employees Provident Fund Organisation, which show consistent improvements in key labour market indicators.

However, as per the quarterly bulletin of the period labour force survey, the rate of unemployment in the urban areas declined to 6.6 per cent in Q1FY25. On the back of a fall in the unemployment rate among males aged 15 or above, the overall unemployment rate improved from the four-quarter high of 6.7 per cent in the January to March 2024 period. 

Indicating an improvement in the job opportunities for the urban youth, the unemployment rate in CWS among the urban population aged 15 years to 29 years declined from 17 per cent in Q4FY24 to 16.8 per cent in the April to June 2024 period. The urban unemployment among males aged between 15 years and 29 years improved from 15.1 per cent in the January to March 2024 period to 14.8 per cent in Q1FY25. However, the same rate among females of the same age groups increased to 23 per cent during the quarter from 22.7 per cent in Q4FY24.

"It is good to see the government addressing these macro issues to mitigate its impact on the common man and we see worries around key issues receding among the citizens. The yo-yo impact however continues as these macro issues do not act in isolation but are interdependent on different factors like the global economy, war, job cuts, monsoons etc," said Amit Adarkar, Chief Executive Officer (CEO) Ipsos India.

Inflation Monster
India's retail inflation fell in July to a near five-year low, as food prices eased from previous highs due to a base effect, government data showed on Monday. Annual retail inflation was 3.54 per cent in July, down from 5.08 per cent in June. The latest print is the lowest since August 2019. Retail inflation fell below the Reserve Bank of India's (RBI) target of 4 per cent largely due to the high-base effect, suggesting the slower pace of price rises was temporary. The inflation rate was last recorded below 4 per cent in September 2019.

As the debate regarding removing food prices from the inflation-targeting framework has picked up pace in recent months, a study has suggested that the country should not alter the framework, as doing so would have negative consequences. A paper by the National Council of Applied Economics Research (NCAER) has advised that food-price inflation should not be disregarded.

The paper stated that in India, food is a much more important component of the consumption basket and the approach of looking through fluctuations in food and fuel price inflation without consequences for core inflation might not work as far as India is concerned.

India's Economy
The survey which tracks public opinion on social and political issues stated that at least two in three urban Indians (67 per cent) are of the view that India is headed in the right direction. Showing a moderation in India's economic growth momentum, the real gross domestic product (GDP) rose 6.7 per cent in the April to June 2024 quarter, the slowest in five quarters, and well below the Reserve Bank of India’s (RBI's) expectation of a 7.1 per cent uptick.

Crisil Ratings in a report stated that the decline in government consumption spending was a drag on GDP growth. Reducing growth in net taxes limited the rise in GDP over gross value added (GVA) growth Also, despite healthy growth of 7 per cent, manufacturing was slower than in the last quarter of fiscal 2024, while agriculture and services improved. 

However, the improvement in agriculture was relatively modest, which capped the rise in GDP, according to Crisil. “India is like a beacon of hope for most markets as despite being the world’s most populous country and beset with natural calamities in August at different fronts, we have trudged forward. Even with tough global crises and macro-economic conditions, the citizens have confidence in how the country is being steered and the positive direction in which it is headed,” added Adarkar.