Unemployed Indians shining shoes. File Photo: AFP / Ravi Raveendrain

After being in denial for months, the Narendra Modi-led National Democratic Alliance government has finally conceded that India has a serious unemployment problem. In addition, in the fourth quarter of fiscal 2018-19 the country lost to China its coveted distinction of being the world’s fastest-growing economy.

The government had earlier kept the National Sample Survey Office data on jobless rate under wraps. The report ought to have been released in December last year but was made public only recently.

In February the NSSO report was leaked by the Business Standard newspaper, stating that unemployment had touched a 45-year high of 6.1% in 2017-18. The government was quick to issue a denial and many of its ministers, as well as officials of Niti Ayog, a government policy think-tank, rubbished the newspaper report as fake.

However, after scoring a thumping win in the general elections, the government released NSSO figures that vindicated the newspaper’s claims.

Also Read: India’s jobs data leaves Modi govt red-faced

The report from the Periodic Labor Force Survey of NSSO has revealed that unemployment among urban youth in the age group of 15-29 years who are looking to enter the job market has been consistently rising for three quarters of 2017-18 and was at 23.7% in the December quarter.

In 2017-18, among male youths unemployment rose to 18.7% from 8.1% in 2011-12, while for females it rose to 27.2% from 13.1% in 2011-12. Overall the unemployment rate for rural men rose to 5.8% in 2017-18 from 1.7% in 2011-12 and for urban men it rose to 7.1% from 3.0%. This is the first report on employment data after the Indian government took the controversial step to ban high-value currency notes in 2016.

For the new government, it will be a challenge to create jobs for an increasingly educated workforce and to ensure that the new workers are well equipped to enter the labor force.

As for the country’s gross domestic product (GDP) growth, it slipped to a five-year low of 5.8%, while China’s GDP grew at 6%. This is the first time India has lost out to China in the past two years. The poor performance was mainly because of low agricultural and mining output, along with subdued consumer demand.

According to the Central Statistics Office, on a year-on-year basis, the GDP growth of 5.8% in the fourth quarter ended March was much lower than the 8.1% in the same quarter of the previous year.

Domestic consumer spending, one of the main movers of the Indian economy, slumped over the past few months. Sales of cars and sport-utility vehicles (SUVs) fell to a seven-year low. Tractor, motorbike and scooter sales were also down. India’s leading maker of fast-moving consumer goods, Hindustan Unilever, has also reported slower revenue growth in the past quarter.

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