We should get ready for more jolts as pandemic poses a high risk to economy

Lakshmana Venkat Kuchi *

A tad comforting it is to learn India has been able to handle Coronavirus better than many other nations in the world, thanks to a series of strict lockdowns that gave us time to prepare for health emergencies. Our performance in limiting deaths due to pandemic is being appreciated by one and all.

But we are at a stage that, despite the global race for a Covid 19 vaccine, it would take a few more months before it gets accessible for people in India.

Twenty-five lakh cases and rising, it sure is a reason for worry and because of the rate of growth in the number of cases has become faster now.

But, on the positive side, recovery rate has also grown and the mortality rates have fallen, leading one to surmise that we are slowly getting the hang of dealing with the pandemic. However, in a large nation as ours, wish many areas densely populated, dealing with the pandemic is that much tougher.

But what is even tougher is the country’s effort for revival of the economy that came to a sputtering halt due to the lockdown, that was of course essential to contain the spread of the pandemic. Industries and even smaller manufacturing units suffered as supply chains were broken and labour became scarce as migrants went away to their villages.

Now, unless the economy picks up and there is work available for the workers, the labour force will be staring at a work-less scenario and thus a life without wages. In everything is linked together kind of a scenario when it comes to the economy, the lack of money in the hands of the masses results in lesser demand for goods manufactured by the industries and hence less sales and it is a cycle that needs to be broken.

With intervention from the government and investments from the private sector. But, for the present, we are witnessing a depressing economic forecast for the current year with possibility of contraction in growth.

However, across the country, agriculture gives us a big reason to cheer- and with its growth can one see corresponding improvement in other sectors as well. But it will not be enough to lift the economy. The overall impact of the distress in economy is being felt immediately in job losses, across the informal and now in even the formal sector.

The latest estimates from Centre for Monitoring Indian Economy, a private think tank, assess a loss of 18.9 million jobs in the last three-four months alone. In July alone, five million salaried jobs were lost indicating the extent to which economic distress was directly affecting the people. Ever since Pandemic forced lockdown in March end, the employment scenario has only worsened. And even without the pandemic, unemployment was beginning to bite.

More important, estimates from Asian Development Bank predict even more job losses for young people in India, which is scarier.

Already, many out-of-job employees have begun dipping into their provident fund accounts, which is not a very good thing to do. As per media reports, Rs 30,000 crore was withdrawn from EPFO in the recent weeks.

It is not that people who were lucky to stay in their jobs can rejoice. Many of them have had to do with big salary cuts, some as high as 50 per cent. Even with their full salary, they were finding it difficult to run their households and with half the salary? These are some of the problems that are very difficult to capture in surveys.

For a nation battling health pandemic, the resultant consequences on the health of the economy is something that can adversely affect the law and order situation. It could lead to a growth in crime, as it has already been noticed in two south Indian cities of Chennai and Bengaluru.

Anecdotal evidence suggests a spurt in crime in direct proportion to the rise in unemployment. In fact, some of the miscreants involved in the Bengaluru rioting were unemployed youth, according to police officials.

If we take an example from Chennai, the capital city of Southern state of Tamil Nadu, that is witnessing close to 1000 new Covid cases every day, loss of jobs has increased incidents of crime in the city.

In fact, as per a Tamil Nadu government survey of households in the state, showed that over half of the households in the state had lost at least one job or more. Each household has a job-loss story (or livelihood loss). Local police officials were happy that crime had dipped significantly when Covid 19 broke out and national lockdown was imposed from March 24.

Even the alleged criminals were playing it safe and stayed away from “work and duty”. But the local police are finding that the crime chart has again picked up movement in the upward direction with the easing of lockdown norms.

Criminologists and police officials concur that many indulging in petty crime were first timers, many of whom had lost jobs or livelihood. In Bengaluru too, police came to similar conclusions indicating that irrespective of the regions, the pandemic and its aftermath could play along similar lines.

So, what is needed is for the governments, at the central and state levels, to tackle the issue of unemployment and loss of livelihoods on a war footing – at least till the economy is on a recovery path. For, at present, the economy is depressed and economy bruised.

If the pandemic continues, as it could till an effective vaccine is around, for another six months the problem can only accentuate for the affected sectors.

But we can take heart from that sectors dependent on digital commerce, education, learning, delivering consumable goods, essential health care, financial transactions and the like have done very well, even during the lockdown and unlocking process.

There is a lot happening in this sector of the formal sector that hiring is taking place. Also, action is taking place in equipment and infrastructure that is enabling work from home are also doing very well.

In some sections of manufacturing in essential goods is reviving and those linked with government spending. Artificial intelligence and automation sector are returning. But employment scenario and jobs will not recover and get restored to pre-Covid levels, simply because the companies have discovered how to do more with less.