Daily wage labourers and small traders:

Daily wage labourers and small traders saw a loss of employment in the order of 0.2 million in April.

• Some of these agricultural and daily wage labourers may have found work in the construction industry as the sector saw an increase of 2.7 million jobs during April.
• Most of the 6.2 million people released from agriculture and daily wages jobs could well have ended up remaining unemployed during the month.
• This is a clear indication that the jobs scenario is weakening even before recovering from last year’s onslaught.

Did the salaried class escape unscathed?

No. The cumulative loss of salaried jobs since the pandemic began is pegged at 12.6 million, according to CMIE data, and the trend continues with April 2021 seeing this coveted category drop 3.4 million jobs from the level in March 2021.

Which States have been hit the hardest?

As per CMIE data:

• Haryana recorded the highest unemployment rate in April 2021 at 35%, followed by Rajasthan at 28%, Delhi at 27.3%, and Goa at 25.7%.
• Significantly, Gujarat, which, like the above States, also witnessed the ferocity of the pandemic’s second wave, saw unemployment at an appreciably lower level of 1.8%.

Economic consequences of rising unemployment:

Obviously, job losses have a telling effect on incomes.

• CMIE’s said, 90% of Indian families have seen their incomes shrink over the course of the past 13 months.
• Loss of income naturally dampens consumer sentiment and lowers economic demand.
• The RBI’s monthly bulletin published acknowledged that the biggest toll of the pandemic’s second wave was in terms of “a demand shock — loss of mobility, discretionary spending and employment, besides inventory accumulation”.
• This is an ominous sign for the Goods and Services Tax (GST) collections in the coming months.
• The RBI officials asserted that the second wave has so far had only a limited impact on industrial activity, citing the 8.1% growth in electricity generation in April over the pre-pandemic base of April 2019.

Would the situation improve if the current lockdowns were to end today?

Food insecurity is a key welfare issue in the months following an economic shock.

A report from Azim Premji University’s Centre for Sustainable Employment, titled ‘State of Working India 2021, One year of COVID-19’, showed:

• On average, households lost about 22% of their cumulative income over eight months ended October 2020.
• Also, poorer households lost a larger proportion of their already low incomes.
• This not only led to increased poverty levels, but also to the ways in which households coped with this shock was by borrowing, largely from informal sources, selling assets, and cutting back on food consumption.
• This means that even after a lockdown is lifted and employment begins returning close to the earlier levels, consumer spending, the lifeblood of any economy, may remain muted.

How are governments addressing these issues?

The Central government has announced that it will distribute 5 kg of rice and wheat for free to ration card holders across the country.

Individual States have added to this. For example,

• Bihar, has announced that it would add an equal measure to the Centre’s distribution from the State’s resources for free distribution via the Public Distribution System.
• Tamil Nadu has announced a ₹4,000 handout per ration card and has begun distributing the first tranche of half that amount.
• Kerala has promised that no family would go hungry in the State. Last September, the Kerala government announced free food kits for 88 lakh families for four months.
• Karnataka has announced a ₹1,250-crore relief package, through which farmers, auto, taxi and maxi cab drivers, construction workers and other informal sector workers will receive varying amounts in the form of a one-time dole.

Source: The Hindu