India’s GDP in the previous year as per the quarter October-December was already as low as 4.7% and we were all optimistic about gearing up in the year 2020 but then, the coronavirus pandemic struck. The employment rate was already trailing even before the pandemic. India was relatively high unemployment — an official report indicated a 6% unemployment rate in 2017-18 – the highest in 45 years.
About 12 million people enter the workforce every year, and it is no secret that India has struggled with when comes to job creation since forever, and it’s no surprise that the graph seems to go up during the pandemic. Factories have been shut; production has slowed down, making it difficult for workers and laborers to sustain jobs. According to the Centre for Monitoring Indian Economy (CMIE), the unemployment rate was 24% by mid-May. The poor daily wage workers have been the worst hit. Thousands of workers are struggling each day to walk back to their hometowns. The lost jobs, lack of resources, and money have made these already vulnerable groups more vulnerable.
Though the poor have been severely affected, the middle class is also hit. Large sections of the middle class are staring at salary cuts or job losses, which will reduce their purchasing power and ability to take and pay loans sharply. Ultimately, the markets will suffer. Even the large scale supply companies like Amazon and Flipkart have incurred losses as they could supply only essentials in green zone areas. Talking about production, large companies like Maruti Suzuki India had also stopped their production at various plants. It has affected all the people in the pyramid, especially the ones in the lower levels. Though, a lot of companies have resumed work; it would take time to bring the mArket back to normal due to lack of labor now.
India will have to look more carefully at both the United States, which is offering a generous unemployment allowance, and the United Kingdom, which has provided wage support to workers. But India may, sooner than later, need to introduce an unemployment allowance to help citizens overcome this crisis. There have been suggestions to set up the ‘Migrant Workers Welfare Fund’ which will address the requirements of accommodation, health insurance, and unemployment allowance in case a migrant worker shifts a job. Confidence-building measures such as scholarships to the children of the migrant workers for their schooling, access to anganwadis for their children, textbooks and school uniforms, water and sanitation measures at their place of stay, ration card portability, and recreational activities by their employers have also been taken in account.