TLI Staff
New Delhi: India’s urban job scenario is set to remain bleak with the economic slowdown getting deeper and India Inc’s revenue growth being muted in the July-September quarter of the current fiscal.
In the past, even as GDP grew not enough jobs were created. But now the situation is more worrying given that economic growth is declining quarter after quarter reaching six-year low in the first quarter of FY20.
Several research and rating firms have cut their growth forecast for India. India Ratings and Research on Thursday downgraded FY20 GDP forecast to 6.1 per cent, second time in the last two months. The agency had in August revised its forecast downward to 6.7 per cent from 7.3 per cent earlier.
“If there is slowdown then it will clearly impact jobs,” Mahesh Vyas, Managing Director and CEO of Centre for Monitoring Indian Economy Pvt Ltd (CMIE) told Top Lead India.
Vyas, however, noted that the relationship between GDP and jobs had been very week.
“So we have seen for very long time that GDP grew but jobs did not,” he said.
In more bad news for the economy, a CRISIL Research has said that India Inc’s revenue growth – excluding banking, financial services, and insurance (BFSI) and oil companies – is estimated to have declined 3 per cent year-on-year in the second quarter (Q2) of fiscal 2020, the lowest in the past 14 quarters on account of muted private consumption demand.
The decline in revenue has largely been on account of consumer-linked sectors, which are estimated to have witnessed 5 per cent contraction in revenue during Q2 of FY20. Companies in the automobiles sector are estimated to have posted a sharp decline of 24-26 per cent in revenue. The other sectors to have witnessed low revenue growth are FMCG and steel among others.
There has been sharp decline in consumer confidence in recent times.
As a result factory production has remained low. The aggregate capacity utilisation declined to 73.6 per cent in April-June quarter as against 76.1 per cent in the previous quarter. Among other indicators showing poor health of the economy, banking credit to commercial sector plunged to Rs 1.28 lakh crore in the first half of FY20 from Rs 1.85 lakh crore in the same period of the previous fiscal.
The government has announced a slew of measures to boost growth and lift investor sentiment with key among them being slashing corporate tax to 22 per cent from 30 per cent.
With private sector struggling and unlikely to go for business expansion until existing capacity is optimally utilized the job scenario will not improve. The unemployment rate had touched 45-year low of 6.1 per cent in FY18 following demonetisation by the Modi government.
“We have seen that employment has remained stagnant. There is nothing to say that the jobs will grow,” CMIE’s Vyas said.
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