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Thursday, October 29, 2020

Maharashtra: Sudden micro lockdowns led to labour losses, spike in unemployment, says report

In a presentation made to Chief Minister Uddhav Thackeray and senior ministers in a meeting on Monday, the state finance department claimed that the unemployment rate had climbed from 3.9 per cent in July to 6.2 per cent in August.

Written by Sandeep A Ashar | Mumbai | Updated: October 6, 2020 9:42:35 am
COvid crisis, micro lockdowns, labour losses, rise in unemployment, Maharashtra unemployment rate, Maharashtra news, Indian express news“Sudden micro lockdowns have affected normal functioning of firms in the supply chain and also the small and medium enterprises. As the result, the demand for labour has declined,” the report stated. (Representational)

A spike in Maharashtra’s unemployment rate in August is threatening the revival of the Covid-hit economy, a government report has said.

In a presentation made to Chief Minister Uddhav Thackeray and senior ministers in a meeting on Monday, the state finance department claimed that the unemployment rate had climbed from 3.9 per cent in July to 6.2 per cent in August.

“There has been an uptick in the unemployment rate since August. Unemployment has peaked to 20.9 per cent in April but had since declined to 3.9 per cent by July due to measures being taken to gradually reopen economic and public activities. But it rose to 6.2 per cent by August end,” said a senior minister.

According to a finance department report, the latest uptick in unemployment was due to imposition of micro lockdowns in several parts of the state, the loss of work under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) and end of the kharif sowing season.

“Sudden micro lockdowns have affected normal functioning of firms in the supply chain and also the small and medium enterprises. As the result, the demand for labour has declined,” the report stated.

Post lockdown, the unemployment rate had peaked at 20.9 per cent in April from 5.8 per cent in March. It subsequently improved to 15.5 per cent, 9.2 per cent and 3.9 per cent in May, June and July, respectively. In August, it rose to 6.2 per cent, the report stated.

Sources said that during the meeting, some ministers opposed imposition of the micro lockdowns. Earlier, the Centre, too, had cautioned states against localised lockdowns.

The meeting discussed the report on the health of the state’s economy that Uddhav had sought ahead of firming up plans to roll more stimulus packages for businesses. Macroeconomic indicators, both at the national and the state level, were also evaluated.

Incidentally, state Finance Minister Ajit Pawar was not present for the meeting. Pawar had also skipped Monday’s GST Council meeting where Maharashtra was represented by former finance minister Jayant Patil, who currently holds the water resources portfolio. Patil briefed Uddhav and other senior ministers about the developments at the meeting.

Sources said the finance department has said that the “rising unemployment and job losses remain a major constraint in the revival of the state’s economy”. Maharashtra contributes to nearly 14 per cent of India’s gross domestic product.

State’s fiscal managers are worried as the most recent economic indicators, such as GST collections and electricity demand among others, suggest that the recovery seen after the first phase of the reopening in June may have lost momentum.

“State GST collection has declined by almost Rs 18,420 crore in April-September as compared to the same period last year. This indicate the weakness in the economy,” the report said. A source added that the “total revenue growth between April and September this time was down 33.5 per cent over this period last year”.

The report, meanwhile, projected that “the industries and the services sector is expected to remain under pressure owing to a demand contraction”. With a bumper crop expected this year, the report has forecast that the “agriculture growth will remain strong”.

While the Cabinet is expected to announce relief in electricity payers and to the construction industry in the coming days, the state is banking on the ongoing festival season to revive its struggling economy to a certain extent.

Govt chooses option 1

At loggerheads with the Centre over the issue of GST shortfalls, the state government has decided to indicate that if forced to opt from one of the two options put forward by the Union government to bridge the gap, it will pick the option of borrowing through a Reserve Bank of India (RBI) facilitated window.

Contending that it will impact development spend, the state is still in opposition of borrowing on its own, but following Monday’s GST Council meet – where it was disclosed that 21 states, most ruled by the BJP or its allies, had opted for option one – the Maharashtra government has also decided to side with the option as reported by The Indian Express on September 18.

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