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Wednesday, October 27, 2021

Recovery to gather pace, but worries over jobs, capex remain

However, even as tax collections exceed expectations and high-frequency indicators show a pick-up, employment numbers remain worrisome.

By: ENS Economic Bureau | New Delhi |
September 27, 2021 3:38:23 am
Hopefully, the recovery process won't lose steam and the supply-side issues will be sorted out. (Representational)

The fairly swift recovery following the second wave of the pandemic will likely gain momentum in the festive season ahead.

However, even as tax collections exceed expectations and high-frequency indicators show a pick-up, employment numbers remain worrisome. Headline unemployment has fallen in September to just 5.89 per cent but urban joblessness is hovering around 8 per cent; CMIE estimates the net cumulative increase in employment in the past 12 months at just 44,483. That’s just 0.044 million on a base of 400 million jobs.

Hopefully, the recovery process won’t lose steam and the supply-side issues will be sorted out.

While exports are surging, an analysis by HSBC shows high-skill exports — mobile phones, machinery, pharmaceutical products, and IT services — have gained global market share, while low-skill and labour-intensive exports — textiles and agriculture — have been weak.

It is good news curbs on expenditure have been lifted and that several central government departments can now spend from their allocated budgets starting October; the curbs had limited spending by some departments to just a fifth of the FY22 outlay.

The other big concern is the capex cycle: An analysis by Nomura shows that while FY23 may see some impact of deferred investments, originally planned during FY22, the phasing profile of envisaged capex reveals persisting near-term risks to the private investment outlook.

With inputs from Financial Express

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