In the month of March 2020, when India underwent world’s largest lock-down due to COVID19, the unemployment figures went berserk. Before we entered COVID phase, the Urban unemployment was already at a 45 year high of 9%. With lock-down & mass migration of labor force, unemployment shot to all time high of 30%. Rural unemployment, which was trailing at 7% shot to 21%. That was bloodbath of unemployment.

But now with unlocking of the economy, the number of jobs being reclaimed matching those that were lost in the initial panic. A quick bounce back was expected by experts, but no one expected it to be so quick.

Chart 1. (Source : CMIE)

The current unemployment number for the country at large is around 13.6%. Thanks to sudden surge in MNREGA jobs on offer. (See chart 2).

Chart 2. (Source : CMIE)

What needs to be seen is that the strength of this momentum. There is some unemployment that is going to be sticky and difficult to overcome. Over last 3 months, we have seen so much of upheaval that even 13.6% unemployment looks to be a rosy picture….when compared to 30%. But the fact remains that India was going through a massive slowdown before we entered COVID19. During the COVID19, the situation has only worsened. The government will have to pull out some tricks out of hat to revive the economy. Conventional methods may not work.