Mumbai: Figures for the economic impact of India's Covid-19 second wave and the lockdowns across the country to control its spread are now emerging. Investment bank Barclays has said that India is losing about $8 billion--about Rs 60,000 crore--every week in May. The total loss will be $117 billion (Rs 8.5 lakh crore), or 3.75% of gross domestic product (GDP), per Barclays. Unemployment levels have moved into double digits, at 14.73% for the week ending May 23, according to the Centre for Monitoring Indian Economy, with over 17% unemployment in urban India and nearly 14% in rural India. To understand what lies behind these numbers, we speak with Mahesh Vyas, CEO of CMIE.

Edited excerpts:

Take us through what these unemployment numbers mean, particularly in the context of the last one year.

Over the last one year, we have seen the labour markets improve from a very dramatic fall that happened in April and May 2020, when the labour participation rate fell, the unemployment rate shot up and there was tremendous stress. There were lots of job losses around that time. Since that fall, there has been a recovery. In May, [employment] recovered a little, then in June and July as well. According to CMIE, the recovery process stabilised in September 2020. After that, the key numbers started plateauing or worsening. I think there was a slight improvement in December, then from January again it has been falling. So January to March 2021 were not very good, the unemployment rate was showing signs of rising, the labour participation rate was weak. Therefore, we were saying that even before the recovery was complete, the recovery had stalled. And then we got hit by the second wave of Covid-19.

What we've seen in April 2021 is that the unemployment rate went up to 8%, the labour participation rate stabilised at 40%, and things were not looking very good. Very quickly in May, we saw the situation worsening. The unemployment rate rose to 14.5%, then became 14.7% in the week ended May 23. We also have a 30-day moving average number. The weekly numbers only [show] what happened during that week. But if you look at the 30-day moving average, it gives you a slightly longer and slightly more reliable number and that number has gone up to 13%. So we're really looking at unemployment rising, and labour participation rates stalling.

What do these figures mean in terms of absolute numbers? After the previous lockdown, over 100 million jobs were lost and most came back. Now, many of these jobs have been lost again. Who are the people who lost their jobs and which section regained jobs? Secondly, what does this kind of economic damage do to people who lost work, or are the affected people used to moving in and out of the workforce?

Let me explain in some detail. When India was hit by the pandemic in April 2020, about 126 million jobs were lost. That's really a lot. About 90 million of those jobs were of daily wagers. A daily wager is employed by going out to the kerb and finding some job there, or going to some construction site and finding a job there, or pushing a cart to sell [their] wares. When the nation was locked down, almost all the daily wage earners lost their source of income or employment. But as the economy opened up, you could push your cart again, you could go back to the kerb, you could be a plumber or a mason. The construction sites started humming again and you started getting a job again. So the daily wage earners are the people who can move in and out of employment fairly casually. What has happened though, is their earning propensity has declined. So they were doing the same job but earning a little less, and there were fewer opportunities for them to earn as well. Not all the 126 million jobs came back. A small sliver did not get their jobs back. As research done by Amit Basole, Rosa Abraham and their team at Azim Premji University using the same CMIE data has shown, those who lost formal jobs and regained them, a significant number got these back as informal jobs. So informality increased in the post-Covid-19 pandemic period, or rather the period after the first quarter of the pandemic hitting.

Now, what we are seeing besides this is what CMIE has been pointing out for a long time, that there is a steady fall in salaried jobs and that's not abating. We had 403.5 million jobs before we were hit by the Covid-19 pandemic. Best case [scenario] in January 2021 or December 2020, we reached 400 million jobs. So [even in the] best case, we were still 3.5 million jobs short. Today, we're at 390 million. So, we are much worse off. Everybody has not got [their] job back. And those who have got their jobs back have not necessarily got the same quality job. And salaried jobs are still falling.

What's the number for salaried jobs specifically within this 390 million?

[Salaried jobs were] around 85 million before the hit. So, around 73-74 million within the 390 million.

What do such job losses do to families? A lot of people are used to, as you say, casually moving in and out of the workforce. But for others, there will be some form of intermediate or long-term damage, coupled with the fact that there may be health costs to bear as well. How would this manifest in the overall health of the economy and its people?

The best way of seeing [what damage has been done] is to see what people are telling us regarding their incomes. Jobs are back but large numbers of salaried people have lost and are losing jobs. This increase in informality means savings and retirement benefits will get hurt. The probability of remaining employed throughout our working life is also compromised. The rise in the gig economy, in contract labour, in informality is not a good thing. Even law is assisting this kind of movement, which is not healthy. Contract labour, gig work, informal work is what makes us more vulnerable. What's required for an economy is that when we are younger, we earn enough to save for a rainy day. And that rainy day is supposed to be when we are old and cannot earn. If we are earning just for the day when we don't have a job, then we are unable to save for our retirement plan. So this gig economy, contractual labour and informality are going to leave us with less savings for our old age. So I think this is causing a problem.

Let me add one more point. When we ask people in our survey, how's their income today compared to a year ago, only 3% tell us today that their income is better than a year ago; [about[ 55% tell us categorically that it is worse than a year ago, and the remaining tell us that it is no better, no worse. This means, if you account for inflation, that more than 97% of India's population has gotten poorer compared to where they were in terms of income [a year ago]. I think that is a big damaging factor. And it raises the question, how are we going to recover from this situation?

What are the data gaps and challenges that you're seeing? Even though you do a primary survey, what data would you like to see or know more about that will help us better understand our economic and social context today?

Well, we are certainly pushing what is possible. CMIE has been doing employment-unemployment for a long time. We have got numbers regarding income now and should be releasing income, then expenses and then an estimation of poverty. So the entire well-being of households, I think CMIE has got a reasonably good handle on that and we should be getting out with numbers.

But I think what is desperately required in the country is [better, more frequent] enterprise surveys... [T]he labour ministry is trying to do that. But we need to know what our firms are telling us. We know from their balance sheets what they're doing. We know that the wage income growth was barely 4-5% when profits were zooming, doubling and more than doubling during this pandemic, but we do not know what enterprises are doing. What we require to understand the economy is [what enterprises are doing] -- unless the enterprises are not gung ho, unless they're not optimistic, unless they're not going to invest, I don't think we're going to see a recovery very soon. We do have surveys to know what investments are looking like; they're pathetic.

Last year, India saw a huge bounce-back in terms of employment and unemployment. Is there anything in your current reading of the situation which suggests that we could see a bounce-back, maybe not as strong as before but a bounce-back of some sort?

This looks a little different. I feel a little more worried than last time. Last time, there was a very deep fall; we fell off the cliff, almost. But then we came back very quickly as well--because it is a question about whether you're locked [down] or not. Once [lockdown] is released, you kind of bounced back. But what's happened is that many indicators [including] the labour market are showing a decline. And then imagine when the pandemic hit us, that kind of fell off a few percentage points and continued to decline. We did not recover. And we continue to decline.

Now, I find this to become characteristic because there are no forces in the economy that one can see that can take us out of the mess. Can the households do anything themselves? Unlikely, because they've lost incomes, they have become more indebted. The small sliver of the rich are putting their money into the equity markets. And none of them is putting money into real capacity creation. How long can that bubble keep on growing by its own self, because it's not backed by sufficient capacity creations? So the households can't do much. Enterprises are unwilling to do anything because they have got only 66% capacity utilisation. They've got this huge capacity that they're unable to utilise, so they will not spur a recovery in the economy. The government is unwilling to do that.

So if the government is unwilling, if the corporate sector has got no reason to do that, if micro, small and medium enterprises are under a serious crunch, and then households are largely compromised because of lack of jobs and income, what's going to change this? If the government doesn't do anything, I think we are going to be in trouble.

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