Context: As per the early estimates of jobs data revealed  that the coronavirus effect may have a devastating impact on the economy, with the urban unemployment rate soaring to 30.9%, rural employment rate surging to 20.29% resulting in the overall unemployment rate of 23.4%.

More on the news

  • The released figures are based on the Centre for Monitoring Indian Economy’s weekly tracker survey.
  • CMIE’s estimates on unemployment shot up from 8.4% in mid-March to the current 23%
  • If translated roughly in numbers, about 50 million people might have lost jobs in just the initial two weeks of the lockdown.
  • Due to migrant workers off to home for now, the actual scope of unemployment may be even higher and it may show up a little later.
  • Rampant job losses have gripped many other economies, too.
    • Roughly 10 million US workers filed unemployment claims in the last two weeks.

Critics of CMIE’s data

  • India does not have an official , reliable  high-frequency data on jobs.
  • The CMIE’s jobs survey is based on a panel, which essentially refers to observations that are derived by following a sample of people (a panel) over time at a regular frequency. 
    • The latest weekly survey had about 9,000 observations (or participants). 
    • Since two weekly surveys seem to have indicated roughly the same level of unemployment (about 23%), the numbers are reliable.
  • CMIE’s jobs data has been questioned by government officials around the survey’s methodology.
    • Since CMIE is a private research organization, the government is under no obligation to either acknowledge or act upon the figures. 

Causes of Job losses and Statistics

  • Owing to the lockdown, there are no jobs in key sectors in urban India, from restaurants and hotels to retail and automobiles. 
  • Most contract workers in these industries have no income and the few who do are also likely to lose their source of livelihood as many small businesses, linked to discretionary consumption (Like travel) have shut down. 
    • 600,000 ground and support roles on contract in the Aviation industry are at risk while the media and entertainment industry, dominated by temporary workers, could shed about 30% of workers in the short term. 
    • The food services industry in India staffed 7.3 million in 2018-19. Out of this, the unorganized sector employed 3.6 million. 

Shrinking of Service Sector

  • Growth in India’s services sector declined in March owing to COVID-19 after a rise in business activity in February. 
  • The impact of the pandemic is set to worsen in the coming times due to a government imposed 21-day lockdown leaving industries and shop shut.
  • The Services Purchasing Managers’ Index (PMI), which had touched an 85-month high of 57.5 in February, fell to 49.3 after rising for five consecutive months.
    • A figure of above 50 indicates expansion, while a sub-50 print signals contraction. 
    • The manufacturing PMI data for March showed a decline to a four-month low of 51.8 from 54.5 in February.
  • Poor conditions in overseas markets led to the sharpest deterioration in foreign demand.

Significance of Job losses

  • Unemployment in the country has always been a matter of concern, but the urban flare-up witnessed after the nationwide lockdown has come as a worry for policymakers.
  • Given that India had no safe option other than to shut down in order to bring strict social isolation, implications of such a move have called for erecting measures.
    • Business turmoil that will likely result in even more job losses across the economy. 
    • Already, weak order flows have prompted companies to shed staff. 
    • Many businesses could go bust. 
  • Casual or informal-sector workers are not the only at the receiving end of the COVID-19 crisis.
    • Even if the lockdown is lifted, it is being speculated by analysts that millions would slide into poverty due to mass income deprivation.

Road Ahead

  •  The mass income deprivation cannot be resolved simply through instant relief measures or moral suasion.
    • Although cash transfers, meal provisions and other forms of aid must reach the needy as soon as possible to avert a humanitarian disaster. 
  • But sustaining incomes requires the government to save the most severely weakened parts of the economy, mostly the informal economy.
    • This calls for a vast rescue exercise in the shape of an unprecedented fiscal package.


Centre for Monitoring Indian Economy


  • CMIE, or Centre for Monitoring Indian Economy, is a leading business information company. 
  • It was established in 1976, primarily as an independent think tank.
  • CMIE is a privately owned and professionally managed company head-quartered at Mumbai.
  • Today, CMIE has a presence over the entire information food-chain from large scale primary data collection and information product development through analytics and forecasting.


  • It provides services to the entire spectrum of business information consumers including governments, academia, financial markets, business enterprises, professionals and media.
  • CMIE produces economic and business databases and develops specialised analytical tools to deliver these to its customers for decision making and for research. 
  • It analyses the data to decipher trends in the economy.


  • CMIE has built India's largest database on the financial performance of individual companies.
  • It conducts the largest survey to estimate household incomes, pattern of spending and savings.
  • It runs a unique monitoring of new investment projects on hand and it has created the largest integrated database of the Indian economy.
  • All databases and research work are delivered to customers through subscription services.

Purchasing Managers Index (PMI)


  • PMI can be defined as an indicator of business activity pertaining to both the manufacturing and services sectors.
  • For India, the PMI Data is published by Japanese firm Nikkei but compiled and constructed by Markit Economics.


  1. It is a survey-based measure that asks the respondents about changes in their perception of some key business variables (New Orders, Output, Employment, Stocks of Purchases etc.) when compared to previous month.
  2. It is calculated for the manufacturing and services sectors in a separate manner and then a composite index is reached upon.
  3. The headline PMI varies on a scale from 0 to 100. 
  4. A PMI score of above 50 represents an expansion while on the other hand a PMI reading under 50 represents a contraction, and a reading at 50 indicates no change.
  5. The PMI is usually released at the starting of the month.

Advantages of PMI

  • The PMI is published on a monthly basis, while on the other hand, most of the government data series, such as GDP, are published every quarter.
  • PMI surveys are one of the first indicators of economic conditions published monthly, making it a good leading indicator of economic activity.
  • Official data like GDP are frequently subject to substantial revision which makes it difficult to make business decisions while PMI data are not subject to revision after first publication.
Source: Mint