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With 20.1% GDP growth (Y-o-Y) achieved in Q1 FY22, the economy has made up a lot of lost ground. Though the economy is yet to catch up to the Q1 FY20 figures, it can be said that the economy is on track and the growth-oriented policies are working fairly. While the policymakers would predictably continue their growth-booster strategy, they must put employment generation on the top of the agenda. The thrust for growth will become fruitless if the country moves on a path of jobless growth.

Unfortunately, the unemployment figures have not kept pace with the trajectory of the economy. The rate of unemployment measured by CMIE has started creeping up in August, a month when recovery in the economy gathered pace. After climbing down from 11.84% in May, the worst month of the second wave, and reaching in 6.96% in July, the rate of unemployment has risen to 8.32% in August. The 30-day moving average of unemployment is also steadily rising over the past few weeks.

The government has to ensure that the economy creates jobs as it grows. Jobless growth at a time of high inflation, which is itself partly caused by the excess liquidity designed to boost growth, will leave the masses in the lurch. Fortunately, the government has been able to collect high revenues, both direct and indirect. Compared to Q1 FY20, the revenues are far higher than what the expenditure of the government has been. This would allow it the opportunity of spending on infrastructure to achieve the twin objectives of creation of economic assets and generating employment.

While the government should continue nudging the banks to lend to entrepreneurs and follow comprehensive policies to unshackle animal spirits in the economy, it must also cease to be overcautious and start spending. With the economy growing, revenues can only grow. If the government does not relax its tight fist and employment does not grow fast, it would be saddled with increased expenditure on doles and welfare schemes in the long run.