Released: 1 April 2019
March Data Show Continuing Rapid Economic Growth, but...
- Longer term trends over last 2 years show a sharp decline in activity
- Confidence and Growth Indicators all reflect a slowing economy over recent months
- Job data shows very minor recent growth compared with the rapid expansion over 2016-2018
Although economic growth remains incontestably faster in India than in most other countries, worrying signs have emerged in recent months that the rapid growth of recent years may be slowing down.
All the Sales Managers Index data for March reflect growth, but a slowdown in activity compared with trends in previous months.
From the headline Sales Managers Index, to the Business Confidence, Market Growth, and Sales Growth indexes, they all tell the same story. Continuing rapid growth but at a significantly lower level than seen in 2017 and 2018.
The most worrying Index of all is that relating to Jobs, which is now suggesting the job market is growing quite slowly. In a country with a young and rapidly expanding work force, this spells trouble.
Recent Government action seems to suggest that attempts are being made to cover up the problem. In the words of the Economist newspaper: "The (Indian) Government's other alarming innovation has been to discontinue, revise or delay some official data that do not flatter it
". The New York Times was a little more direct "India hides jobs data but truth is clear
In one instance, the Business Standard, a respected Indian newspaper, published leaked findings from an unemployment survey produced by the National Sample Survey Office, a Government agency. Two commissioners responsible for reviewing data in the report, who had suggested that the report be released, resigned in protest when it appeared the Government wasn't so inclined.
The leaked unemployment rate, at 6.1% , doesn't sound so bad in comparison with many other countries , but in India with its huge workforce, a 6% unemployment rate translates into 30 million + people without a job, not including the millions of young people coming into the workforce each year. And 6% also represents a 40+ year high. The report also almost certainly understates the real picture, because it leaves out semi employed people, who are considered employed unless jobless for most of the year.
Other recent reports have suggested that the combined effects of the demonetisation policy and the somewhat hasty introduction of an all embracing Goods & Services Tax has resulted in millions of job losses, and the unemployment rate may be well over 6%
All this in an election year has brought job data into the front line of politics.
Measuring employment and unemployment in India is inherently difficult, if not impossible to do accurately. Nevertheless the accumulation of evidence of different types from different organisations does tally with the conclusion of the just released Sales Managers Index data.
The Indian economy continues to grow. But it is having difficulty keeping its fast growing workforce employed, and a reduction of the growth rate in months to come may make the task very difficult.
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