Supporting the unemployed | HT Editorial – Editorials
India was in the midst of an economic slowdown before the pandemic. With the coronavirus, and the national blockade imposed to curb its spread, the slowdown has potentially turned into a recession. The government’s announcement of the ₹ 20 lakh crore package is an acknowledgment of the crisis in question.
A key way in which this crisis is reflected is in the unemployment figures. Even before the pandemic, India observed relatively high unemployment: An official report indicated an unemployment rate of 6% in 2017-18, the highest in 45 years. More than 12 million people enter the workforce each year, and India has struggled to create new jobs. This trend has now accelerated. According to the Indian Economic Monitoring Center (CMIE), the unemployment rate was 24% in the week ending May 17. Their April data shows that they were predominantly small merchants and workers, followed by employers and salaried employees who lost their jobs. . This is not surprising. If factories and shops are closed, if salaried workers and street vendors are unable to work, if companies begin to dramatically lose revenue, there will be job losses. The problem is that reducing the lock will not immediately restore these jobs.
This is why a key component of any aid package must take this rising unemployment into account. By injecting an additional Rs 40 billion into the Mahatma Gandhi National Rural Employment Guarantee System (MGNREGS), the government hopes to create a financial buffer for those who have returned to their villages. And by revealing structural reforms, he expects the economy to start working. But this will not solve the immediate crisis, where people, in the absence of jobs, have no income, which, in turn, hinders basic subsistence. The poor will be seriously affected, but so will large sections of the middle class who are seeing wage cuts or job losses, which will reduce their purchasing power and ability to take and pay loans abruptly. This, in turn, will have an impact on a variety of sectors. Finance Minister Nirmala Sitharaman said she is open to suggestions and as the year progresses there will be more action. India will have to take a closer look at both the United States, which offers a generous unemployment allowance, and the United Kingdom, which has offered wage support to workers. There will be resource problems and identification and selection of beneficiaries. But India may, sooner rather than later, need to introduce an unemployment benefit to help citizens overcome this crisis.