SINGAPORE — India needs to restore purchasing power in rural and urban areas for growth to pick up again, an economist said Monday.
To do that, New Delhi has to revive jobs that were lost due to the pandemic through both an existing rural employment guarantee scheme and by introducing a similar program in urban areas where work has dried up, Arun Kumar, an expert on India’s informal economy, told CNBC’s “Street Signs Asia.”
“What the government should do really is that the large number of people who’ve lost work, it needs to revive that,” he said
“So therefore it needs to pump in purchasing power into the rural areas, through the rural employment guarantee scheme, and start an urban guarantee scheme because a lot of people who are returning to urban areas are also not finding work,” he said, adding that the services sector is not carrying the same amount of economic weight as before the pandemic.
“Unless the demand is put into the economy, (growth is) not going to really pick up even if you allow industries to reopen,” he said. Kumar also explained that consumer confidence is likely to remain low due to lingering uncertainty as the festive season approaches.
During festive seasons, Indians typically gather in large crowds at places of worships and at shopping malls, especially during Christmas. India now has reported more than 7.1 million cases of coronavirus and over 109,000 people have died. While the number of daily reported cases have recently declined from September highs, there are worries that the figure could jump during the festive period.
The unemployment rate in India was about 6.7% in September, down from the April high of 23.5%, according to data from Centre for Monitoring Indian Economy.
Green shoots emerging
For the three months from April