June 20, 2021

Modi Govt Paralysed as Job Losses Reach Dire Heights


THE number of employed persons in India has plummeted in the past few months by about 2.5 crores and the unemployment rate has zoomed up to about 12 per cent, indicating the immense misery that Indian people are facing. Coming as it does when the brutal second wave of Covid-19 pandemic is just about beginning to abate, and after over a year of suffering the carnage caused by this pandemic and its mishandling, the country’s people have been crushed under unprecedented economic burden. Yet, the central government led by Prime Minister Narendra Modi appears to be paralysed, having offered not a single thought or measure on this calamity.

According to the Centre for Monitoring Indian Economy (CMIE), a private consultancy that is the only source of frequent data on unemployment, the jobless rate had touched 12 per cent in the week ending on June 13. In urban areas, the rate was much higher, at nearly 15 per cent while in the rural areas it was hovering at nearly 11 per cent. CMIE collects data through a periodic sample survey.


In January this year, the number of employed persons – that is, the strength of India’s total workforce across all sectors – was estimated at 40.1 crore (See Chart 1). After dipping slightly in the next two months, the number slid in April and crashed further down in May to touch only 36.6 crore.

Job losses are not unexpected since lockdowns directly impact the earning opportunities of the bulk of population which subsists on daily earnings in informal sector. However, the government’s complete neglect of this dimension of the pandemic has deepened the distress, just as it did last year.

This level of employment is about the same as it was in June last year, when the country was emerging from the heartless and ill-conceived full lockdown that lasted for two months (April and May 2020) and was eased in subsequent months.

The decline in number of employed persons is a dire and chilling phenomenon. It means that existing jobs and occupations have been lost. It is not new entrants into the job market who are looking for jobs – it is working people getting thrown out of their jobs or those self-employed who are losing their sources of income. Part of it can be ascribed to the state-level lockdowns that were imposed after the second wave gathered steam from around mid March. In all, 26 states were under some kind of restriction or other. This naturally finished off any earning opportunities for all the self employed in the informal sector. It also meant that a large number of workers were thrown out from their jobs in various sectors of industry.

But another reason behind this loss of jobs is the continuing economic crisis in the country which pre-dates the pandemic. Economic growth had started slowing down in 2019 itself, months before the pandemic appeared on the horizon in early 2020. Roots of this can be traced to economic follies like demonetisation (in 2016) and GST imposition (2017), as well as the blindly pro-corporate policies that have continued unbridled in the past seven years, with gathering pace. These have led to squeezing the poor relentlessly through unemployment, wage stagnation, price rise etc to the point that consumer spending itself is falling. On the other hand, the corporate sector has neither delivered any new substantial investment – which would create new jobs – nor has it paid enough taxes. In fact it has benefitted from tax cuts, cheap credit and multiple exemptions. Yet, these “wealth creators” have only lined their pockets, not helped the country.


The varied effect of lockdowns in 2021 can be seen from disaggregated figures for occupations provided by CMIE. Daily wage workers appear to have been the worst sufferers with over 1.72 crore losing their jobs – and hence their incomes – in April-May 2021. Salaried and business sections too lost their jobs, their combined total working out to nearly 90 lakh in the two months. These would be predominantly urban jobs.

As happened last year, farming jobs soaked up much of the unemployed. While April saw a loss of about 60 lakh (six million) jobs in the farming sector, probably propelled by the end of harvesting season for wheat and other rabi crops, but in May, with the advent of preparations for kharif sowing, jobs in farming increased by over 90 lakh, according to CMIE estimates. The net result was a gain of about 38 lakh jobs in farming since January.

Construction, which mostly employs low paid and informal labour at a large scale suffered the most, according to CMIE estimates, throwing out over 88 lakh (8.8 million) workers in the two months. Other badly affected sectors include manufacturing (42 lakh jobs lost), hospitality (40 lakh) and trade (36 lakh). Rest of the job losses are distributed over many other sectors.

What is notable is that the manufacturing sector too has lost jobs in this period though most of it was exempted from the restrictions in many states. There have been reports that where 50 per cent of workforce was to be allowed for work, employers simply terminated the services of remaining employees.

The huge loss of jobs yet again reveals that the governments (state and central) have not taken any measures to ensure that employers do not terminate services of their employees during restrictions due to Covid. In many cases, even earned wages have not been paid. In many states, contractual workers (even those employed with state governments, like school teachers) have not received wages for April or May, and sometimes for even further back. These employees are not counted as unemployed but in reality they are no better than those actually thrown out of jobs.


Aggregate unemployment rate has jumped into double digit category in May 2021 with the average for May being nearly 12 per cent as reported by CMIE.

As Chart 2 below shows, unemployment rate has been unconscionably high for the past year after recovering from the 2020 lockdown. It has hovered between 6-9 per cent throughout, even as corporate sections and government spokespersons were boasting about “green shoots” in the economy and the chimerical “V-shaped recovery”. But, strikingly, unemployment started rising steeply since about mid-March when the average unemployment rate for the country was about 6.5 per cent. In three months it has almost doubled to reach 12 per cent. 

A back of the envelope calculation shows that 12 per cent unemployment rate would mean about four crore persons who are looking for jobs actively. It does not include those who have become discouraged and are waiting out the lean season/lockdown subsisting on borrowings or charity.

Job losses are much higher in the urban areas – in June urban unemployment was pegged at nearly 15 per cent. In the rural areas, jobless rate was estimated at nearly 11 per cent. This wide difference is not surprising since farming is absorbing a huge proportion of the jobless people. Urban areas do not have that kind of options, except that migrant workers, like last year, quickly rushed back to villages leaving behind the towns and cities that they were working in. 

It must be noted that this was the lean season in agriculture – rabi harvest was over and kharif preparations yet to begin. This means that rural households were most vulnerable in this period, especially agricultural labourers and small/marginal farmers with little surplus grain and no savings to tide them over these hot months.

There is a concealed distress in these numbers. Agriculture supposedly absorbs a lot of excess labour, in crisis situations. Returning migrants start helping out on farms. Unemployed youth or others too join in. All these ‘extra’ people are counted as ‘employed’. But in reality, the same work is being done by an ever larger number of people. The same returns will be divided amongst a larger number of people, lowering individual incomes. It is disguised unemployment and its consequence is immiserisation.


In this dire situation, the governments should have come forth with immediate relief measures in the form of financial support for families, directions to employers not to hold back wages (earned or for the period of lockdowns), stopping evictions of tenants, free medical services and more food grains and essential items to working class families. However, just like last year, there has been no move from the miserly Modi government, nor from the cash-strapped state governments, barring a few. The only relief offered by the central government has been in the form of additional 5 kg food grain per month for those with ration cards. Not only is this amount of grain insufficient in itself but the absence of any other financial support has devastated working class families across the country.

Left parties, trade unions, farmers’ organisations and many people’s organisations have demanded that the Modi government should give up its policy of sitting on government funds and start spending money to help people. It has been demanded that at least Rs 7,500 be paid every month to all non-tax paying families as economic support to tide over the economic crisis. This should be in addition to at least 10 kg food grain and pulses etc over and above the monthly PDS grain that is given at present.

Such a policy would not only provide enormous relief to suffering people but it would also provide a real and meaningful stimulus to the economy, as opposed to the concessions and exemptions being given to corporate sector. Cash in the hands of people would generate demand in the economy and thus revive the flagging economy. This can happen only if the government abandons its neoliberal dogma of spending less on people’s welfare and more on wealthy elite. Not doing so will only increase and consolidate the gathering discontent against the Modi government in the coming months.