Unprecedented unemployment

 At 27.1%, India's unemployment rate is now four times that of America and reflects a major human tragedy

One in every four Indians is unemployed now. The coronavirus-induced lockdown for the longest period in the world has triggered job losses that are unprecedented in history. Over 122 million people lost their jobs in April, according to estimates from the Centre for Monitoring Indian Economy (CMIE). Over 75% of them are small traders and wage-labourers while a significant number of salaried workers too lost their jobs. The large-scale disruption hitting businessmen is an indication that the loss during the lockdown is not limited to just jobs but also to enterprises. The numbers are staggering, worse than anything the world has ever known. India lost more jobs since the imposition of the nationwide lockdown in March than the US did during the Great Depression. At 27.1%, the country’s unemployment rate is now four times that of America. What is worrying is that India had entered the lockdown with an already high unemployment level. At 8.7%, the rate was already at a 43-month high, up from just 3.4% in July 2017. The five-phase stimulus package, announced by Finance Minister Nirmala Sitharaman, was clearly not enough to wriggle out of the crisis because it failed to boost the demand. The lockdown and its aftermath may prove expensive for the economy as Goldman Sachs predicted it to shrink by 5% in 2021 fiscal year. Of the 122 million who have lost their jobs, 91.3 million are small traders and labourers. This is not just a mind-boggling number but reflects a major human tragedy as they constitute the most vulnerable section of society.

The relaxations in the lockdown since April 20 have not shown any positive impact on the unemployment rate. In fact, the urban unemployment rate stood at 27% during the week ending May 17, higher than the rural unemployment rate. The lockdown, aimed at curbing the spread of coronavirus, has brought the economic activity to a standstill. The disturbing scenes of desperate migrant workers fleeing cities on foot to return to their villages dominated the television screens and newspaper columns last month. Large companies across various sectors, including retail, automobiles, hospitality, aviation and media, have announced massive layoffs in recent weeks while many small and medium businesses are likely to shut shop altogether. The job loss and salary cuts will slow down recovery even after the pandemic. The much-touted ‘Atmanirbhar Bharat Abhiyan’ package contains long-term measures to ease credit and liquidity concerns but will have no bearing on the immediate task of providing succour to the people impacted by the pandemic. Since the vulnerable sections need cash in their hands to feed their families, the Centre should have ensured direct cash transfer to the poor.

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