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Jobless growth
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Growth with employment opportunities is important to sustain upswing in the GDP for a developing economy like India.

With working age population expected to increase by 1.3 million every month due to rising population and high share of young population in it, 8 million jobs would needed to be created every year.

As employment rates are much below the GDP per capita, increase in working age population to total population by 0.5% only, compared to decrease in employment rate by 1.5% and increasing labor productivity due to structural transformation, they showcase insufficient increase in creation of jobs.

Male employment rate decreased very little compared to female employment rate that decreased by 5% that explains inequality in distribution of jobs in the market.

The increased share of public sector employment in the total employment growth is not healthy for the Indian economy due to limited government revenue and large fiscal account deficit. Current account too is of little help with rising oil prices and growth in imports surpassing growth in exports resulting in high trade deficit. Though increasing remittances, strong FDI inflows, depreciation in nominal exchange rate and GST revenues are expected to reduce pressures on the current account deficit, thus support in creating employment opportunities for the masses

As global stock market prices correlate highly with Indian stock market, India might experience slow growth in employment rate because of high unemployment rate in US.

Although reduced dependency ratios in the country are a positive sign for the economy, since it represents the willingness of the population to work. Industrial production growth was also seen as strong but unstable with manufacturing and services sectors showing signs of growth after a long time, depicting an improvement in the employment rate.

It is forecasted that the unemployment rate would average at around 3.5% while the GDP growth rate is in the range of 7-7.5%.

Indicators

Q2/18

Q3/18

Q4/18

Q1/19

Unemployment Rate

3.5

3.5

3.5

3.6

GDP Growth rate

7.3

7.4

7.2

7

It is widely believed that investment in infrastructure and greater integration with global markets could lead to job creation opportunities.

 

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