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Employment situation grim, says CMIE; Rural wages drop, says RBI report

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Employment situation grim, says CMIE; Rural wages drop, says RBI report

Labour participation and employment rates in India are around their lowest levels, says a report of Centre for Monitoring Indian Economy (CMIE) which produces economic and business databases.

And, while employment is at its lowest, rural wages have reduced dramatically since 2014 under Narendra Modi government, making it a period of distress according to the Reserve Bank of India (RBI).

According to an article by Mahesh Vyas on CMIE website, the employment situation continues to remain grim in the country.

According to CMIE, the unemployment rate continues to remain high compared to the levels a year ago when they ranged closer to 4 per cent although it fell slightly to 5.9 per cent in April 2018 compared to the over 6 per cent rate seen in the preceding two months.

April began with rising unemployment rates of over 7 per cent, but then the rates moved decidedly lower in the second half of the month.

Labour participation rate (LPR) declined in April 2018. At 43.1 per cent the LPR in April was among the lowest. In the past 28 months, (since the CMIE started measuring LPR), this was the second-lowest LPR level.

“The low LPR and high unemployment rate combine to give us a low employment rate in April 2018. The employment rate was 40.7 per cent during the month. This is a small improvement over the 40.5 per cent level of March 2018. But, March and April this year mark the lowest employment rates recorded since January 2016 when we began these measurements,” said Vyas.

Here are some points he makes:

– The estimated employed persons in the country was 403.2 million and the unemployed who were actively looking for a job during the month was 25.1 million.

–  An additional 9.5 million were unemployed and willing to work but were not actively looking for a job.

– The total workforce willing to work and was waiting for jobs to become available therefore was of the order of 35 million.

– Large numbers of labour force quit the labour markets post demonetisation and have not returned to the labour markets. It is likely that when conditions improve these could come back. If we add these, then the workforce that is willing to work but does not have a job is much larger.

Vyas describes the current situation, particularly in urban India, as “sombre”.

Noting that the number of applicants for a single job often runs into several thousands, Vyas says: “Although the overall unemployment rate fell in April, it rose in urban India – from 6.5 per cent in March to 6.6 per cent in April. Labour participation rate fell from 41.1 per cent to 40.8 per cent. And, the employment rate fell to its lowest level of 38.1 per cent.”

The employment rate had touched a new low of 38.4 per cent in March 2018 itself. However, in April, it fell further to 38.1 per cent.

The working age Vyas takes into consideration are all persons above the age of 15 years. In September 2016, over 41 per cent of such people were working.

Employment in urban India fell to an 11-month low in April 2018.

However, says Vyas, the month’s data also seems to suggest a pause in the growing employment in urban India seen in the preceding six months. This rising employment had stabilised the employment rate at around 40 per cent after seeing a fall in the preceding months.

At the same time, a RBI report released last week (April 25) talked of a sharp decline in rural wages since 2014. “During the last 10 year period, a high growth phase in rural wages from 2007-08 to 2012-13 was followed by a phase of significant deceleration,” the RBI report said.

Between October 2007 and October 2013, the report noted, wages in the agricultural and non-agricultural sectors grew at 17% and 15%, respectively. Since November 2014, however, agricultural and non-agricultural sector wages grew at only 5.6% and 6.5%, respectively.

Employment situation grim, says CMIE; Rural wages drop, says RBI reportPhase I (Jan 2002-Sep 2007)

The first phase spanned from January 2002 to September 2007, when the average growth in rural nominal wages remained around 4 per cent, while the average rural inflation stayed around 4.5 per cent. As a result, there were extended spells when growth in real wages stayed in the negative territory. This period has been analysed quite extensively in the literature. Several authors have also termed this phase as the period of agrarian distress, a lot of which was attributed to poor agricultural performance and lower employment opportunities outside agriculture (Himanshu, 2006; Abraham, 2009).

Phase II (Oct 2007-Oct 2013)

This phase covers the period from October 2007 to October 2013. During this phase, the average growth in nominal agricultural and non-agricultural wages stood at around 17 per cent and 15 per cent, respectively, surpassing rural inflation which averaged at around 10 per cent. Evidently, there were several months when growth in real wages reached such levels that were not a regular phenomenon, at least never observed in the preceding decade.

Phase III (Nov 2014- Oct 2017)

This is the current phase which began from November 2014. Notwithstanding data limitations (as mentioned in section III) one cannot ignore the fact that rural wage growth has recorded significant deceleration during this phase. This phase is also characterized by low inflation occasionally surpassing growth in nominal rural wages, pushing real wage growth to the negative territory. For obvious reasons, such movements in rural wages after a prolonged period of boom has attracted the attention of policy research. Again, this phase has been labelled as a period of rural distress. However, if we consider average growth in rural wages and inflation, we do not find a significant gap between the two. Average rural inflation during phase III so far is around 4.0 per cent, whereas average growth rates in nominal agricultural and non-agricultural wages are 5.6 per cent and 6.5 per cent, respectively.

A whole host of factors including the global slowdown in growth, collapse of international primary commodity prices, and major contraction in food prices led to the decline in growth of rural wages, according to the RBI report.

The Indian economy also suffered two consecutive droughts in financial years 2015 and 2016, which wreaked havoc in rural India, said a report in Quartz India.

The ineffective implementation of the Mahatma Gandhi National Rural Employment Generation Scheme (MGNREGS) in recent years has also contributed to the decline in farm income, the Quartz report said, on basis of RBI report.

Moreover, growth in the construction sector, which saw a significant pick up during 2000 and 2012 and was the major driver of rural non-farm employment, slowed down in recent years.

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Google announces country-specific domain names for its search page

This transition to a centralised domain may help Google optimise AI performance in delivering relevant search results.

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In a significant move aimed at unifying its search experience, Google has announced plans to phase out country-level domain names, such as google.ng for Nigeria and google.com.br for Brazil. Instead, the tech giant will redirect users globally to a standardised domain, google.com. This decision aligns with Google’s ongoing effort to enhance search functionality and accessibility, building on the improvement in local search capabilities introduced in 2017.

In a recent blog post, Google explained that it will begin redirecting traffic from these country code top-level domains (ccTLDs) to google.com. This transition will be implemented gradually over the coming months. Users may be prompted to adjust their search preferences during this process, as the company works to streamline the user experience.

“Historically, our approach to delivering localised search results relied on ccTLDs,” Google stated. “However, our capability to offer localised experiences has evolved significantly, making these distinctions unnecessary.” The company reassured users that the core functionality of its search platform will remain unchanged and that compliance with various national regulations will continue.

This initiative reflects Google’s commitment to improving how search results are tailored to individual users without the need for separate country-specific domains. While the official rationale emphasises enhancing global user experience, some industry experts speculate that the change may also be motivated by a desire to better integrate artificial intelligence (AI) into search results, potentially leading to reduced operational costs.

Google employs AI Overviews, a tool designed to aggregate information from a broad range of online sources to provide concise responses to user inquiries. This transition to a centralised domain may help Google optimise AI performance in delivering relevant search results.

Overall, as Google implements this shift, users can expect a more unified search experience. While changes in browser addresses may occur, Google emphasises that the way search operates and its compliance with national laws will remain consistent. This strategic shift signifies Google’s ongoing efforts to adapt to the evolving digital landscape and user needs globally.

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In HUL vs HCL defamation case, Delhi HC orders take down of Lakme sunscreen ad disparaging Derma Co

Honasa, in its plea to the Delhi High Court, argued that HUL’s claims are misleading and disparage competitors, damaging their reputation. In retaliation, HUL filed a countersuit against Honasa in the Bombay High Court, escalating the corporate feud.

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A legal showdown between Honasa Consumer Ltd. (HCL), the parent company of Mamaearth, and Hindustan Unilever Ltd. (HUL), which owns Lakmé, reached the Delhi High Court this week, with both FMCG giants filing defamation lawsuits against each other. On Thursday, the court ordered HUL to pull its current Lakmé sunscreen advertisements, prompting the company to agree to revise its campaign by removing references to “online bestseller” and altering the depicted packaging colours.

The dispute centres on Lakmé’s recent “SPF Lie Detector Test” campaign, which HCL alleges unfairly targets its Derma Co. sunscreen by questioning the efficacy of rival products.

In the ads, HUL claims that some “online bestseller” sunscreens, marketed as SPF 50, provide protection closer to SPF 20, based on in-vivo testing data from the past decade. While no brands are explicitly named, visuals juxtaposing yellow bottles—resembling Derma Co.’s packaging—against Lakmé’s sparked Honasa’s ire.

Honasa, in its plea to the Delhi High Court, argued that HUL’s claims are misleading and disparage competitors, damaging their reputation. In retaliation, HUL filed a countersuit against Honasa in the Bombay High Court, escalating the corporate feud.

The controversy erupted when Ghazal Alagh, co-founder of Honasa, took to LinkedIn to criticise the FMCG sector’s lack of competitive drive, suggesting that legacy brands like HUL have grown complacent. Her comments were seen as a direct jab at Lakmé’s campaign, which challenges the SPF claims of newer sunscreen brands dominating online markets. “The industry needs fresh competition to shake things up,” Alagh wrote, igniting a public spat.

Lakmé’s campaign asserts that some top-selling sunscreens falsely claim in vivo testing—a method involving live organisms like humans or animals—while delivering subpar protection. In a social media statement, Lakmé doubled down, saying, “Certain online bestsellers advertise SPF 50, but their in-market samples test closer to SPF 20.”

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Sensex and Nifty jump nearly 2% as US suspends additional 26% tariffs on India until July 9

Foreign Institutional Investors (FIIs) had sold equities worth ₹4,358.02 crore on Wednesday, signaling caution, but Friday’s momentum suggested a shift in sentiment.

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Indian stock markets staged a robust rally on Friday, with the BSE Sensex skyrocketing 1,310.11 points, a 1.77% gain, to close at 75,157.26. The NSE Nifty followed suit, climbing 429.40 points or 1.92% to settle at 22,828.55, breaching the 22,900 mark during intra-day trading. The surge came on the heels of a White House announcement suspending additional tariffs on India for 90 days until July 9, offering a reprieve amid global trade tensions.

The US decision, detailed in recent executive orders, pauses levies that President Donald Trump had imposed on April 2, targeting India and roughly 60 other nations. Those duties threatened Indian exports ranging from steel to shrimp, raising concerns about competitiveness in the US, the world’s largest economy. The temporary suspension sparked optimism among Indian investors, propelling gains across major sectors.

Leading the charge among Sensex constituents were heavyweights like Tata Steel, Reliance Industries, Power Grid, NTPC, Kotak Mahindra Bank, and Adani Ports. However, not all stocks joined the rally—Asian Paints and Tata Consultancy Services lagged behind, unable to capitalize on the upbeat mood.

Vinod Nair, Head of Research at Geojit Investments Limited, attributed the market’s buoyancy to the tariff relief. “The unexpected pause on US tariffs provided a much-needed breather amid global uncertainties,” Nair noted. He added that while a major IT firm’s recent results fell short of expectations, its robust order book signaled potential growth in the latter half of FY26.

The Indian markets’ performance stood in stark contrast to global trends, where fears of a US-China tariff war cast a shadow. On Friday, China escalated its trade spat with the US, hiking tariffs on American imports to 125% in response to Washington’s 145% levies on Chinese goods.

Asian markets reflected the unease, with Tokyo’s Nikkei 225 plunging nearly 3% and South Korea’s Kospi slipping, though Shanghai’s SSE Composite and Hong Kong’s Hang Seng bucked the trend with gains. European markets traded lower, while US indices had closed sharply down on Thursday, with the Nasdaq tumbling 4.31%, the S&P 500 falling 3.46%, and the Dow Jones shedding 2.50%.

Back home, the rally followed a lackluster Wednesday, when the Sensex dipped 379.93 points to 73,847.15 and the Nifty fell 136.70 points to 22,399.15. Thursday’s market holiday for Shri Mahavir Jayanti gave investors a pause before Friday’s surge. Foreign Institutional Investors (FIIs) had sold equities worth ₹4,358.02 crore on Wednesday, signaling caution, but Friday’s momentum suggested a shift in sentiment.

Elsewhere, global oil prices edged up, with Brent crude rising 0.32% to $63.53 a barrel, reflecting ongoing volatility in commodity markets.

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