Why India stands out as sore thumb on job front

For decades India's economic fortunes ebbed and flowed with other emerging nations, but in recent months it seems to have become unmoored. The global economy is enjoying its best year of the decade, with a worldwide pick up in GDP and jobs growth, and very few economies have been left behind. India is one of the outliers, with GDP growth slowing and unemployment rising.

The Organisation of Economic Cooperation and Development says that all 45 economies that it tracks will grow this year, the first time this has happened since 2007, the year before the global financial crisis led to a worldwide recession. Moreover, three quarters of all the countries will grow faster this year than they did last year; India is in the slumping minority , with GDP growth now expected to decelerate this year.

In the global jobs picture, India stands out as even more of a sore thumb.The worldwide unemployment rate, as calculated by JP Morgan research, is almost back to its pre-2008 crisis low of 5.5 per cent. Developed economies from the UK to Japan have the lowest unemployment rates seen in many decades. In emerging economies, the unemployment rate has been falling since 2014 and this year even countries such as Russia and Brazil, which experienced deep recessions, are seeing a marked improvement in the labour market. In India, meanwhile poor quality data makes it difficult to put a number on the job woes, but the available data is grim and news stories about jobs losses abound.

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So why is the Indian economy , which rose and fell with global trends for so long, bucking them now? One theory points the finger at India's high real or inflation-adjusted interest rates, but real rates have risen in most countries this year as inflation has unexpectedly declined everywhere; so this can't explain why India is different now. A part of the explanation is that the broad economic recovery has led to a rebound in global trade, which had slumped badly after the 2008 crisis, and India is sitting out this recovery .

Indian exports have picked up this year, but much less than in other emerging nations.

The question then is why are Indian exports under performing? One possibility on offer is the rising value of the rupee, which makes exports less competitive, but the rupee's rise against the dollar has been exactly in line with other emerging market currencies this year. So currency doesn't answer the mystery . Also, latest research shows that trade is seven times more sensitive to changes in demand than to exchange rate movements.

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