The rupee's rise against the dollar has hurt employment in the textile and handcrafts sectors
The Manmohan Singh government, which is battling inflation, has another worry at hand: a shrinking job market. While the government at the Centre has not been able to rein in prices, it has admitted that rupee appreciation against dollar has resulted in the loss of about 2 million jobs.
"In certain sectors like textiles, leather, marine products and handicraft, there is a net decline in exports, which has led to job losses. It was estimated that unless remedial measures are taken, the total job losses could be as high as two million," minister of state for commerce Jairam Ramesh told Rajya Sabha.
The government was expecting a loss of 400,000 to 500,000 in the textile sector. But the latest statistics suggest that the problem is more acute that what was anticipated. That the government is concerned over the worsening employment scenario was evident when prime minister Manmohan Singh promised measures to tackle the situation.
The government is certain to experience the impact of the job cut. Reports from Tamil Nadu say that almost half of the powerloom units in the state have closed shop. Tamil Nadu has the second largest aggregation of powerloom units. Maharashtra has 800,000 units while Gujarat has 450,000 units. The rivals of the ruling alliance at the Centre are sure to put the blame of job cuts on the Centre's failure to put a policy in place for meeting the challenges faced by exporters.
The Congress has reasons to be worried as the development coincides with the spiralling prices of food items. With the NDA and the Left have unleashed a campaign against the government, the Congress fears that it will not be in a position to cash in on the feel good factor over the budget.
A significant section of the Congress leadership is of the view that the talk about high growth will not translate into votes unless the government takes some measures to contain the rising prices of essential items.
The growing unease among the middle class is another cause of concern for the party. The party on Wednesday amplified the demand of the middle class to cut interest rates on home loans. "The Indian Banking Association (IBA) should convene a meeting of all its members and ask them and follow the example set by Central Bank of India and Allahabad Bank which cut interest rate on home loans."
Finance minister P Chidambaram had said on March 6 that interest rates on home loans up to Rs 2 million should be brought down, but added that Reserve Bank of India had to take a final call on the matter.