India's Economy Since The Covid Crisis: Rural Vs Urban

INDIA'S ECONOMY SINCE THE COVID CRISIS: RURAL VS URBAN

How has the Indian economy fared since the Covid crisis? The below graphs show two indicators of the health of the economy:

1. % of workers who are in industry + services

2. % of workers who have regular wage/salary jobs

from 2018-19 (the last normal/pre-Covid year) to 2025 - for rural areas and urban areas separately.

1. % of workers who are in industry + services

a) Rural

This decreased from 42.2% in 2018-19 to 38.5% in 2019-20 due to the Covid crisis. Then it increased to 42.8% in 2025 - which is slightly above the pre-Covid level. This is good news.

b) Urban

This decreased from 94.5% in 2018-19 to 93.5% in 2020-21 due to the Covid crisis. Then it *further decreased* to 92.5% in 2025. This is very bad news.

2. % of workers who have regular wage/salary jobs

a) Rural

This decreased from 13.4% in 2018-19 to 12.1% in 2020-21 due to the Covid crisis. Then it increased to 14.1% in 2025 - which is slightly above the pre-Covid level. This is good news.

b) Urban

This decreased from 48.8% in 2019-20 to 46.4% in 2020-21 due to the Covid crisis. Then it increased to 47.6% in 2025 - which is still below the pre-Covid level. This is not good news.

Thus the Indian economy has become a two-track economy: rural and urban. And surprisingly, the rural economy is doing better than the urban economy . . .

Data-source: Periodic Labour Force Survey (PLFS)

Edmund Phelps: Inflation Vs Unemployment

EDMUND PHELPS: INFLATION VS UNEMPLOYMENT

Edmund Phelps, winner of the 2006 Nobel Economics Prize, has passed away. He won the Nobel Prize for "his analysis of the inter-temporal trade-offs in macroeconomic policy". 

Brief bio:

# BA @ Amherst College

# PhD @ Yale University

# Professor @ Columbia University

Some of the most fundamental models/concepts/principles in today's macroeconomics have come from him:

# Expectations-augmented Phillips curve.

# No long-run trade-off between inflation and unemployment.

# Unique equilibrium unemployment rate (where firms raise their wages at the same rate as wages are expected to rise).

# Golden rule of capital formation (to maximise long-run consumption): Optimal savings rate = Capital income / National income.

# Optimal R&D investment rate = The investment rate that yields a return equal to the economy's growth rate (similar to the above principle).

# Time-inconsistent preferences: "I want to save X amount for my children - but my parents want me to save Y amount for my children." Policy implication: Public measures that increase the savings of all generations (like a public pension system) can increase the welfare of all generations.

Major papers:

# The golden rule of accumulation: A fable for growthmen (American Economic Review, 1961)

# Investment in humans, technological diffusion and economic growth (American Economic Review, 1966)

# Phillips curves, expectations of inflation and optimal unemployment over time (Economica, 1967)

# Money-wage dynamics and labor-market equilibrium (Journal of Political Economy, 1968)

# The statistical theory of racism and sexism (American Economic Review, 1972)

Info-source: Nobel Prize Org

West Bengal Election 2026: Analysis

WEST BENGAL ELECTION 2026: ANALYSIS

In the last election (2021) Trinamool Congress won a whopping 216/294 seats (73%) and BJP won only 77 seats (26%). Trinamool with almost a 75% majority looked invincible. But there were two important things:

1. Votes: Trinamool got 48.5% of the votes and BJP got 38.1% - a difference of 10.4% points. A big gap - but not as big as the seats gap.

2. Trend: The bottom graph tells the real story. In 2021, BJP had massively improved its position/performance: from just 10.6% votes in 2016 to 38.1% in 2021 - an increase of 27% points. BJP clearly had the momentum - the only question was: could it sustain its momentum to overtake Trinamool?

The question was answered on Monday: BJP got 45.9% votes (+8% points) and 207 seats (70%). Trinamool got 41.1% votes (-7% points) and only 80 seats (27%). BJP converted its vote gap of -10% in the last election to +5% this time.

In a first-past-the-pole system, a small vote gap can translate into a big seats gap. Trinamool did it in 2021 - and BJP has done it this time . . .