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COVID-19 lockdown: Nationwide Unemployment Rate Jumps to 24% since March 22nd

New Delhi: Unemployment in the country has always been a slow-burn crisis, but the urban flare-up witnessed after the nationwide lockdown took effect on 25 March should worry policymakers. India had no safe option other than to shut down, as only strict social isolation could have bought us the time needed to erect defenses against a rapidly advancing threat to people’s lives. Nearly three months after a novel coronavirus was identified in China, we still do not have a cure for COVID-19, the disease it causes. Its virulence was sure to throw all semblance of normal life out of gear. That livelihood would be snatched away by it was regrettably obvious too. But when the scale of the disruption is thrown into sharp relief by jobs data, it enjoins the government to respond with all the resources it can muster to alleviate distress.

The unemployment rate in the nation has jumped by nearly three-fold amid the nation-wide lockdown announced to combat the Cobit-19 spread. According to the data released by the Centre for Monitoring the Indian Economy(CMIE), the unemployment rate in urban areas increased to 30% in the week ending March 29, about 3.5 times the rate of 8.7% for the week ending March 22. For rural areas, the corresponding figures were 21.0% and 8.3%. The overall unemployment rate increased from 8.4% to 23.8%. The nationwide lockdown was announced on March 24.

The Times of India citing data from CMIE said that for the week ending April 5, the unemployment rate is estimated to rise further to 30.9% for urban areas, 20.2% for rural areas and 23.4% at the all-India level, reaffirming the link between the spike in unemployment and the ongoing lockdown.

Worth mentioning here is that the salaried population is only a small fraction of its total workforce in India due to which, many migrant laborers had to move out of cities after the lockdown was announced. According to estimates of the International Labour Organisation (ILO), only 22% of India’s workforce falls under the category of salaried employment while 78% had no assured salary and hence was bound to suffer during this period.

The mass income deprivation being observed cannot be resolved simply through instant relief measures or moral suasion—both of which are, of course, welcome. Cash transfers, meal provisions and other forms of aid must reach the needy as quickly as possible to avert a humanitarian disaster. This is a top priority, no doubt. But sustaining incomes requires the government to save the most severely weakened parts of the economy. This calls for a vast rescue exercise in the shape of a fiscal package of a size unseen in Indian history. How it could be funded may be a point of perplexity, given that our government finances are already stretched, but funded it should be—one way or another. For now, much administrative attention might be focused on an exit strategy for the lockdown, as it should be. But the economy is crying out for help too.

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Ankur Guleri & Umesh Patel
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