View of RISE OF UNEMPLOYMENT: STIMULUS OF COVID-19

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ACCENT JOURNAL OF ECONOMICS ECOLOGY & ENGINEERING

Peer Reviewed and Refereed Journal IMPACT FACTOR: 7.98 (INTERNATIONAL JOURNAL)

Vol. 05, Special Issue 04,(ICMCSEH)June 2020 Available Online: www.ajeee.co.in/index.php/AJEEE

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RISE OF UNEMPLOYMENT: STIMULUS OF COVID-19

1Dr. Namrataa Kapoor

Associate Professor, Daly College of Business Management 7 Baikunth Dham, Behind Anand Bazaar, Indore

2Dr. Manish Dubey

Assistant Professor, Shri Vaishnav College of Commerce, Indore

Abstract:- Covid-19 has tremendously affected the entire globe. In India where more than 120 million workers are small traders and daily wage earners, lost jobs in April as pandemic forced a nationwide lockdown. The phase of Indian economy was already going unfavorable before covid-19 and the sudden shock of such pandemic resulted in prolonged country wide lockdown and global economic downturn. This pandemic stemmed disruption of demand &

supply chains, fall in consumption, stress on banking & financial sector, and there by the entire economy slowdown with severe health crisis. Although the magnitude of this crisis on economic condition will depend upon the duration of the lockdown. This research paper is descriptive & conceptual, in which an attempt is made to bring to the fore discussions on the employment scenario and household income in the pre-lockdown and post-lockdown periods, with a motivation to spell out the probable consequences on the Indian economy.

Keywords:- Covid-19, Unemployment & Household Income.

1. INTRODUCTION

COVID-19 is far more than a health crisis, as its influence on economic crisis is grim, and much grimmer for developing countries like India. The pandemic has already exposed the health exposures facing India, especially its rural poor, and urban slum dwellers. As a measure to contain the community transmission of the virus, the government announced a nationwide lockdown.

The impact of a lockdown is turning out to be immense as all economic activities have come to a standstill, factories are not running, establishments are closed, and most markets are shut, there is a disruption in work, wages/income and food--all three interconnected for crores of people in India. Almost 90 percent of workers in India work in the informal economy that part of the economy which thrives on daily work, and daily cash, with little provisions of employment protection.

Like demonetization, the current lockdown has exposed millions of workers and their families to starvation, hunger, death and very bleak future prospects. India’s track of employment creation since 2000s has not been very impressive& even economic growth of India was not good enough to deliver jobs. The corona virus pandemic comes as huge shudder to the labour market in India, denting the employment scenario and threatening the survival of millions of workers and their families.

Covid-19 is highly contagious in nature, which makes an imposition of social distancing, self-quarantine, closure of institutions, public facilities & more over restriction of mobility, i.e. overall this disease requires the economy of a country to stop its normal functioning. Migrant laborers are suffering and many started losing jobs as construction sites shut down. Such a health crisis has triggered a prolonged global recession.

1.1 Objectives

The objectives of this research paper are:-

 To study the impact of Covid-19 on Unemployment in India

 To study the impact of Covid-19 on Household Incomes in India 2. IMPACT OF COVID-19 ON INDIA’S GDP

GDP growth has been badly affected due to Covid-19,led to health & economic crisis and subsequent lockdown which brought economic activities to a simulated standstill. The economy could pick up as industries restart their operations with the streamlining of supply chains and migrant workers getting back to their jobs. In this period of world recession, it is being difficult to estimate possible job losses resulting in weak global economic scenario.

However, good companies are likely to retain most of their workforce and with minimum wage cuts, as they resume operations. The various financial support in the form

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of economic relief to the unprivileged people is also going to affect the fiscal policy of the country. Moreover, the uplift of the lockdown and the approach or the strategies of the industries to come back in the normality will decide the trend of GDP further, but considering the present situation where country is going to dip in poverty & unemployment it seems to be challenging to gear up in such circumstances.

Figure:- 1 Estimated impact from COVID-19 on India's GDP 2020

Source: https://www.statista.com

On the basis of the data in above figure it can be anticipated that India’s quarterly GDP was 1.2 %in the period of Oct-Nov.2019 which raised to 5% in the quarterly period between Jan- March 2020, but after the declaration of lockdown on 25^th March 2020 and restricting 1.3 billion people is going to result sweep in GDP in the quarter April-June 2020. The hardest hitof Coronavirus on Indian Economy in terms of tremendous decrease in GDP, due to its impact majorly on all sectors including financial, real estate and professional services sector.

3. IMPACT OF COVID-19 ON UNEMPLOYMENT

According to the CMIE, Centre for Monitoring Indian Economy report has declared that 27 Million youth in the age group of 20-30 years lost their jobs in April 2020 , but at the same time due to the initiatives taken up by the Central & State government to open up industries in a stunned manner, the unemployment rate fell from 27.1% to 24 % in the Mid-May.

According to the report 11% of the youth lost their jobs, 34.2 Million of these young males & females reported to be employed in the year 2019-20 which came down to 20.9million approx. in April 2020. This number is going to increase with time gradually looking to the present health crisis which majorly affect the savings and spending power of these young households.

Figure:- 2 Impact of Covid-19 on Unemployment

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The above figure represents the impact of covid-19 on an Indian economy has been detrimental due to complete lockdown. This damaging impact is still pending as the lockdown is not yet uplifted. Unemployment went to 26.2% on 19^th April 2020. Social distancing resulted in job losses and many households terminated domestic help services due to which the majority of people engaged in those services lost their jobs, people working with hotel & tourism industry lost their jobs and many people involved in small trading business lost their work and earnings.

4. IMPACT OF COVID-19 ON HOUSEHOLD INCOME

According to the report of UN’s International Labour Organization (ILO) in the second week of April 2020 claimed that approx. 400 million workers will be pushed into poverty from India’s informal sector due to Covid-19. The data in the reports are revealing that there is a decrease in income since the lockdown of around 84% of Indian households, and they even don’t have enough resources to curb this situation.

Therefore, it’s a time for Indian policymakers and government to plan their action plans in order to maintain a balance between health & economic crisis. However, it also reflect that India’s existing economic stimulus and income support programmes do not adequately target households in these quintiles that have experienced dramatic job losses due to the lockdown.

Figure:- 3 Impact of Covid-19 on Household Income

The above figure represents that household income in India was severely squeezed as a result of lockdown due to Covid-19. The significant decrease in the level of income with household is evident from the report stating fall in income from 9 percent in late February to gigantic 45.7 percent in Mid-April. The lockdown in India has restricted 1.3 billion people due to which the drastic impact on household income has been observed.

5. CONCLUSION

India had entered the lockdown with already high unemployment levels. At 8.7%, the rate was already at a 43-month high, up from just 3.4% in July 2017, according to CMIE.The author of the paper concluded that this phase of pandemic had triggered its huge effect on the economic growth of countries, resulting world recession. All economic activities at global level has come to a shutdown point.

However, in this difficult phase, there is a hope of light where many multinational companies are looking forward shift their manufacturing base from China to India and existing companies need to revamp their strategies and gear up to compete with the global markets. Although the government is trying to stable the economic position along with making proper availability of medical facilities, essential goods and financial support to the weaker section of the society.

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Therefore, we have to somewhere uplift the lockdown with proper precautions and taking care of social distancing so that people can get back to their work, supply of goods &

services can be maintained and in general all the other issues like unemployment, low GDP, less household income along with health crisis can be addressed well in order to sustain.

REFERENCES

1. Agrawal, Shruti & Jamwal, Anbesh & Gupta, Dr Sumit. (2020). Effect of COVID-19 on the Indian Economy and Supply Chain. 10.20944/preprints202005.0148.v1

2. Kumar, Sunil. (2020). Impact of corona virus (COVID-19) on Indian economy.

3. S. Mahendra Dev & Rajeswari Sengupta, 2020. "Covid-19: Impact on the Indian economy," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2020-013, Indira Gandhi Institute of Development Research, Mumbai, India.

4. https://www.statista.com/study/72531/coronavirus-covid-19-impact-in-india/

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