India and the US must grab this chance to reset their relations
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Vivan Sharan
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Prime Minister Narendra Modi and US President Joe Biden had their first phone call this week. They re-affirmed a commitment to a rules-based international order, a theme which is likely to become a mainstay of the Biden administration. However, the new President inherits unprecedented uncertainty, fuelled by a global economic crisis, and an assertive China. India shares these concerns. This seems an opportune moment to strengthen US-India bilateral ties, to define resilient globalization and a stable regional order. But, both countries must face some hard facts together at the outset.
Construction fuels jobs revival in rural India, cities struggle
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The revival in real estate and construction activity in the rural sector is because of greater construction of individual buildings
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Increased construction activity in rural areas is driving a recovery in India’s labour market instead of cities, services sector and industrial belts.
Of the nearly 12 million net additions to the employed workforce in January, most are helping rural India build houses and roads. The construction and real estate sector in rural India absorbed more than 8.23 million workers in January, showed data from the Centre for Monitoring Indian Economy (CMIE). In comparison, the labour-intensive construction sector in urban India added less than 350,000 people.
Job Half Done
The Budget focuses on growth to create jobs but lacks holistic measures to solve the problem of massive unemployment
Illustration by Raj Verma
India s biggest advantage, its demographic dividend where its working age population is more than its dependent population can become its biggest nightmare without sufficient employment avenues. The year 2020 will be known for business shutdowns, layoffs and joblessness due to the pandemic. In December 2020, according to the Centre for Monitoring Indian Economy, India s unemployment rate was as high as 9.1 per cent. Many expected Union Budget 2021 to take note of this and create ample growth and employment opportunities. The government has tried to do that by increasing spending. An increase in fiscal deficit to 9.5 per cent of gross domestic product (RE FY21) and 6.8 per cent in FY22 shows intention to increase spending and push growth, which will, in turn, create jobs. There is also a 34.5 per cent increase in allocation
Govt spending in FY21 much less than projected, will not spur demand: CMIE
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According to CMIE, the big numbers of 2020-21 were used largely to regularise government books of accounts and partly to provide relief and not to revive the economy.
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“If this is the case as it seems to be so, this is, in reality, not an expenditure of 2020-21 but a settlement of past dues of the government. It increases government borrowing but it does not increase spending in a sense that could spur demand,” CMIE added.
The government s estimated increase in spending for 2020-21 may be only 17.3% and not 28.4% as projected by the government and will not spur demand, the Centre for Monitoring Indian Economy said.
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