(Mahesh Vyas is the Managing Director & CEO of Centre for Monitoring Indian Economy. The article first appeared in the print edition of The Indian Express on September 18, 2021)
- A high and rising unemployment rate is evidently not a potent political tool in India. Between inflation and unemployment, the two economic indicators conjoined theoretically by the Phillips curve, it is inflation that wields political power. Inflation hurts almost the entire population. Equally importantly, high inflation rates can upset financial markets that in turn exert pressure on regulators to keep inflation in control. The unemployment rate does not have such a constituency. Unemployment directly impacts only the unemployed, who don’t count much. A 7 per cent unemployment rate impacts less than 3 per cent of the population. Worse still, society perceives being unemployed as an individual shortcoming, and not an outcome of a macroeconomic malaise. The victim suffers the ignominy, not the system. The unemployed are seen as inadequately educated, awkward or not smart. Implicit in this thinking is the fallacious belief that if these people were to work harder and be sharper, they could all find jobs.
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