Workers assemble Royal Enfield motorcycles inside a factory in Tamil Nadu. Photo: AFP/Arun Sankar

India’s stringent lockdown last year to contain the spread of Covid-19 has hit employment hard and the country is still not out of the woods, says think tank the Centre for Monitoring Indian Economy.

On March 25 last year, the Indian government imposed a countrywide lockdown which stopped economic activity and caused widespread job losses, and the think-tank said the recovery has not been consistent.

The abrupt shutdown announcement, which gave the country only a few hours to prepare, was a body blow to daily wage workers in the cities. Their employers abandoned them, their landlords kicked them out and their labor contractors vanished.

Penniless and dependent on charitable organizations, people walked, cycled and hitchhiked on trucks to reach their homes hundreds of kilometers from their workplaces.

According to the data provided by the Centre for Monitoring Indian Economy, the unemployment rate in February was 6.9%, up from 6.53% in the previous month. However, it was better than in February last year (7.8%).

The data also showed that cities have fared better than villages in providing employment. The unemployment rate in urban areas declined to 6.99% in February this year from 8.08% in January, while in rural areas it rose to 6.86% from 5.83% in the preceding month.

The unemployment rate has been volatile in the past six months, ranging from 6.5% in November 2020 to a high of 9.1% in December 2020. The average unemployment rate during this six-month period was about 7.4%.

After the lockdown was imposed last year, the unemployment rate soared to 23.5% in April, followed by 21.7% in May. It began tapering off after the easing of lockdown measures in June (10.2%) and July (7.4%), but rose again in August (8.3%).

Experts point out that from July onward there has not been a consistent decline in unemployment. They said the farm sector, which engages 55% of the country’s workforce, has done well, but hiring has lagged in urban and industrial areas.

As for the government initiatives to boost hiring, they said policy interventions and the monitoring of existing schemes and initiatives at the ground level are required for better results.

Last October, the government launched the Atmanirbhar Bharat Rozgar Yojana project to encourage hiring and the restoration of loss of jobs during the pandemic. The labor ministry claims the scheme has benefited 1.65 million people and it aims to reach out to 5-6 million.

On the other hand, India’s inflation is on the rise mainly due to soaring fuel prices. According to data released by the Commerce and Industry Ministry, the country’s wholesale price index-based inflation doubled to a 27-month high of 4.7% in February, as against 2.03% in the previous month. Retail inflation, or the consumer price index, also surged to a three-month high of 5.03% in February, up from 4.06% in January.