The Centre for Monitoring Indian Economy has published unemployment figures for April 2021. As expected, with the second wave of Covid-19 hitting the economy, unemployment has risen by 73.5 lakh. From January 2021 to April 2021, the increase in unemployment is to the extent of 99 lakh. The unemployment rate is around 8 per cent and is supposed to be the highest in four months. The job losses have been spread across regular and casual workers as well as the self-employed. Similarly, the segments where unemployment has hit the hardest include informal sectors like household helps and office supply chains to more formal sectors like hospitality, retail, travel and tourism. It may be recalled that last year business units had disengaged a large number of workers. With this round of retrenchment, most manufacturing units are now supposed to be at the bare minimum level of employment. Any further cut would affect operations and revenues. In other words, further shrinkage of demand or another round of supply chain disruptions may force these units to close down in large numbers. It is also clear that the recovery from the first wave’s effects is still not complete. New jobs are not being created. Hence, this round of job losses may be indicative of a widespread collapse of productive activity in the economy.

The unemployment situation appears grim, to say the least. New jobs are going to be very scarce even when the economy begins to recover at a faster clip. The cost to the economy will be very high in terms of production foregone by the wastage of an important productive resource. The social and political costs of having an army of unproductive and unemployable people can be steep in terms of rising crime and violence. The government’s advisers and policymakers are obsessed with the gross domestic product’s growth rate as the sure-fire indicator of recovery. However, in India, there has been recovery in terms of growth, but hardly any recovery in terms of new employment. Any strategy that focuses on recovery must consider unemployment as a separate and more important problem. There is an unhealthy silence on the Central government’s part regarding urgent measures to heal the economy. Narendra Modi should understand that rising unemployment can turn out to be a bigger disaster than the toll taken by the pandemic.