Increase in unemployment, sluggish automobile sales increases gloom surrounding the economy

After a positive growth in the festive months of October and November, retail sales of passenger vehicles as well as commercial vehicles again slumped in December, 2019, as per figures released by the Federation of Automobile Dealers Association (FADA). The vehicle registrations in Regional Transport Offices (RTO) has been considered as a surrogate for vehicle retail sales by FADA. The December data shows that passenger vehicle sales in Dec’19 fell to 2,15,716 units from 2,36,586 units a year back – a decline of 9%. The only segment which showed a positive trend in December was 3-wheelers which grew by a mere 1% from corresponding period a year back. 2-wheelers registrations declined by 16% while the sharpest drop was seen in commercial vehicles segment which fell to 67,793 units in Dec’19 vis-a-vis 85,833 units in Dec’18.

Registration by vehicle type – Dec’19 vs Dec’18 (source : FADA)

As per FADA’s official statement, despite attractive discounts and robust customer enquiries, conversion to actual sales remained subdued in December, with weak consumer sentiment being considered the main reason for this decline – sharpest so far in the current financial year.

In more gloomy news, according to figures released by the Center for Monitoring Indian Economy (CMIE), unemployment levels in the country rose to 7.5% in the period Sep-Dec 2019. According to CMIE estimates, this was the seventh consecutive wave in which unemployment has increased, starting May-Aug, 2017 when the unemployment rate stood at 3.8%. The CMIE data is based on survey of 1, 74, 405 households across the country.

In a most worrying trend, it emerges that unemployment increases with higher education, suggesting that quality of employment is also a major challenge. Unemployment among age group 20-24 years, typically the career starting age is at 37.0%, while the same jumps to 63.4% among graduates in that age group.  

Unemployment by Education level and Age groups

Last year, the NSSO data for the period July 2017-June 2018 estimated unemployment at 6.1% – a 45 year high figure. However, government said due to change in methodology, was not comparable to past data.

All eyes are now on the Union Budget 2020 to see the steps planned by the government to pull the economy out of the current state of doldrums.

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