The recovery is accelerating, but worries about employment, investments remain



The fairly rapid recovery from the second wave of the pandemic is likely to gain momentum over the coming holiday season.

However, even as tax revenues exceed expectations and high-frequency indicators show a recovery, employment figures remain worrying. Overall unemployment fell in September to just 5.89 percent, but urban unemployment hovers around 8 percent; The CMIE estimates the cumulative net increase in employment over the past 12 months at just 44,483. That’s just 0.044 million based on 400 million jobs.

Hopefully, the recovery process will not run out of steam and the supply issues will be resolved.

As exports increase, an HSBC analysis shows that highly skilled exports – mobile phones, machinery, pharmaceuticals and IT services – have gained global market share, while low-skilled, labor-intensive exports have gained global market share. – textiles and agriculture – were low.

It is good news that spending restrictions have been lifted and that several central government departments can now spend from their allocated budgets from October; the borders limited the expenditure of some departments to only one-fifth of the expenditure in fiscal year 22.

The other big concern is the capital expenditure cycle: an analysis by Nomura shows that while FY 23 may see some impact from deferred investments, initially planned in FY 22, the phase profile of planned investments reveal persistent short-term risks to the outlook for private investment.

With contributions from Financial Express



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