When global firms disengage, employment suffers

While inward FDI in India does create jobs, the magnitude and quality of job generation need scrutiny

The most recent labour statistics, for August 2021, released by the Centre for Monitoring Indian Economy (CMIE) shows that the unemployment rate has increased from around 7% in July to 8.3% for August 2021. In absolute terms, employment shrunk from 399.7 million in July to 397.8 million, that is, 1.9 million jobs were lost in one month.

Sectoral analysis shows that most of the jobs lost were farm jobs; while non-farm jobs did increase to absorb some of these, the quality of new jobs generated is a matter of concern. While employment in agriculture fell by 8.7 million, non-farm jobs increased by 6.8 million, mainly in business and small trade, but the manufacturing sector shed 0.94 million jobs. Thus, much of the labour shed by agriculture has been absorbed in low-end service activities.