Joblessness : Pain refreshed

India’s perennial scare of unemployment is looming large as economic growth is going to a tailspin.   GDP growth was the slowest in nine years during the first quarter of FY 2012 and the second quarter is likely to witness a similar fate. Index of Industrial production again contracted for the third time in last four months creating the fear of job cuts in Indian industries. This slowdown comes at a time when the country already faces job loss in rural area due to rainfall-deficit. Services sector, India’s new job engine is also slowing down due to lack of demand and rising cost.   

Slump in industrial growth thus can be taken as the worst in the decade. It shrank 1.8 percent due to a deep dip in manufacturing which constitutes about 76% of the industrial production. This slowdown in manufacturing is further aggravated by shrinking exports to recession-hit Europe and slowing U.S. Apart from this the capital goods which has shown growth only once in 10 months also slumped 27.9 percent. Consumer goods industry is also lackluster because of shrinking demand and price rise. Slowdown in manufacturing sector has already dried up potential for higher jobs in industries. The blue collar jobs are now at stake with an increasing pressure of production cuts.  Collapse in industrial production indicates that corporate investment is going to dry up more hence new job creation is just impossible for next six months to one year.

Reserve Bank of India and Central Bank are in deadlock whether or not cut down the interest rates. India’s interest rates are among the highest in major economies. It is very important to ease the rates in order to stimulate demand and encourage investment. RBI is pressurized to make rate-cut but high inflation is playing a spoilsport. Inflation is a notorious demand dampener. Price rise is now gripping the services sector and resulting less demand, lesser investment and reduction is jobs.

India has witnessed a remarkable improvement in jobs market with the help of rapid economic growth of recent years. Unemployment rate has significantly reduced during the last decade. This is the first serious blow to the job market after many years. Economic slowdown is just not taking its toll from potential of jobs creation but it is also forcing industries for painful job cuts.  Joblessness, India’s perpetual socio economic riddle has become a more complex ordeal now.