MUMBAI (Reuters) – Nizamuddin Abdul Rahim Khan, age 23, is playing cricket on a muddy, unpaved road in the Rafiq Nagar slum of Mumbai, India’s financial centre, on a steamy July day.
There is little trace of India’s rapidly expanding economy here.
An estimated 800,000 people reside in Rafiq Nagar and its neighbouring regions, the most of them live in small rooms scattered amid winding, dark lanes, which originally served as Asia’s biggest waste dumping site.
According to Naseem Jafar Ali, who works with an NGO in the neighbourhood, the young people in the area have a difficult time finding employment or labour and often idle away the day.
Urban unemployment in India increased dramatically during the COVID-19 pandemic, peaking at 20.9% in the quarter ending in April-June 2020 while salaries decreased. Although there are now fewer full-time jobs available, the unemployment rate has decreased.
Even while the overall Indian economy is predicted to develop at a world-beating 6.5% in the financial year ending in March 2024, economists claim that an increasing number of job seekers, particularly the young, are turning to low-paying temporary labour or reverting to unstable self-employment.
India has more than 1.4 billion inhabitants, surpassing China as the world’s most populous country. Its much-heralded demographic dividend is that about 53% of them are under 30; but, without employment, tens of millions of young people are starting to weigh on the economy.
“Unemployment is only the beginning of the problem. The major challenge of underemployment and disguised unemployment persists under the surface, according to Radhicka Kapoor, a fellow of the ICRIER economic research organisation.
In order to support his father and his four sisters, Khan, for instance, offers himself as ad hoc work for construction or house repairs. He makes roughly 10,000 Indian rupees ($122) each month doing this. There won’t be any issues if I find a steady job, he claims.
India is at danger of an economic vicious cycle. India’s hopes of fostering the economic development required to provide jobs for its youthful and expanding population are undercut by declining employment and salaries.
The demographic dividend for the nation is referred to by economist Jayati Ghosh as “a ticking time bomb.”
It’s shocking, she continued, that so many educated individuals who have spent a lot of their own or family money on education are unable to get the employment they need.
“A lost generation” is more important than merely the possibility of economic loss.
LITTLE BUSINESSES FAIL
Because of the high cost of living and lack of a jobs guarantee plan like the government provides in rural regions, unemployment is more worse in India’s cities. Many of the army of rural jobless still go to the metropolis in search of employment.
While urban unemployment was 6.8% in the January–March quarter, data from the government showed that the proportion of urban workers who had full-time jobs had fallen to 48.9% in December 2022 from an already low 50.5% shortly before the epidemic began.
This indicates that just 73 million of the projected 150 million urban workers are employed full-time.
According to the most recent period for which official statistics is available, the average monthly income for those with full-time occupations in metropolitan areas was 17,507 rupees ($212) in the April-June 2022 quarter.
This was only slightly higher than the months of October through December of 2019—the time preceding the pandemic—by 1.2%.
The earnings of the self-employed, however, have decreased, as per study by Ghosh and C.P. Chandrashekhar, both of the University of Massachusetts, Amherst, for the April–June 2022 quarter, to 14,762 ($178.67) rupees. In the quarter from October to December 2019, it was 15,247 rupees.
The collapse of small enterprises, which were the foundation of employment, is the major development, according to Ghosh.
The sustainability of small businesses has been continuously under assault since the Indian government chose to demonetise 86% of the country’s in circulation currency in 2016, she added, with the epidemic being the most recent.
In 2022–2023 (April–March), nearly 10,000 micro, small, and medium-sized businesses would close their doors, the government said in parliament in February. More than 6,000 of these units had shut down the year before. However, the government made no mention of whether any fresh businesses were founded during those times.
Khan’s area, typical of the urban sprawl of the 21 million-person metropolis, has seen many families suffer from job losses and decreased salaries in recent years. Young employees are especially susceptible.
Student Arshad Ali Ansari, 22, said that shortly after the epidemic began, he saw his brother and sister lose their employment.
Ansari said that his family of eight only makes enough money to get by on his 60-year-old father’s monthly salary of roughly 20,000 rupees while seated in a single room with a kitchen attached.
His younger brother, who had been employed by a bank, was forced to work with their father painting homes when the epidemic cost him his job.
Ansari replied, “My brother has both education and experience.