The Indian economy’s ‘long covid’ problem
₹1.15 lakh per year. In real terms (adjusted for higher prices of goods and services), that is 6.7% higher than in 2019-20, the last pre-covid year. After the steep decline in incomes in absolute terms in the covid years of 2020-21 and 2021-22, all states staged a recovery in 2022-23, as areas emerged from lockdown, and consumers opened their wallets.
Of the 23 states for which per capita income data for 2022-23 was available, 19 bettered the all-India rate. But there were wide differences between states in terms of the extent to which they showed improvements in incomes. At one extreme are states like Tamil Nadu, Assam and Odisha, which have shown double-digit growth in per capita incomes (chart 1).
At the other extreme are affluent states such as Delhi and Maharashtra, which have shown a per capita change in GDP well below the national average (though still positive). The growth data for 2022-23 is incomplete as industrially important states like Gujarat, or high-income states like Goa or Kerala, have not yet reported GDP data for 2022-23. At first glance, data on jobs also gives cause for optimism.
This shows that unemployment rates actually fell during the lockdown. The overall unemployment rate for both men and women, across rural and urban areas fell from 4.8% in 2019-20 to 4.1% in 2021-22 and further to 3.2% in 2022-23. Unemployment rates in 2022-23 were actually lower than that in 2018-19, for urban areas as well, with the exceptions being Himachal Pradesh, Jammu and Kashmir, and Chhattisgarh.
This runs contrary to the trove of reports on the trauma that individuals and households had to face during lockdown, with many being thrown out of work. But dig deeper and a more complex picture emerges. The first problem
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