400 million Indians at risk of falling into poverty during crisis: ILO2 min read . Updated: 08 Apr 2020, 11:56 PM IST
- Economists said poverty will be a bigger challenge for India and may set the economy back by years
- While urban unemployment rate was 30.9%, the rural unemployment rate was over 20%, the data showed.
NEW DELHI : As many as 400 million Indians, including migrant workers and daily wage earners, are at risk of being pushed deeper into poverty because of the covid-19 pandemic, the International Labour Organization (ILO) said.
The Geneva-based body’s warning comes at a time when the coronavirus outbreak continues to spread across India and a complete relaxation of the lockdown post April 14 looks bleak.
The forecast indicates that there may be lasting economic damage from the shock caused by the covid-19 pandemic, including widespread joblessness. Loss of wages, in turn, is likely to trigger a slump in demand.
Economists said poverty will be a bigger challenge for India and may set the economy back by years.
“Economic growth and poverty are directly linked and we now know that how rating agencies have downgraded the GDP (gross domestic product) growth rate. Besides, if unemployment data is showing that it has tripled in last three weeks, then it is easily understandable that poverty must have gone up significantly," said Arup Mitra, a professor of economics at Institute of Economic Growth in New Delhi.
India, which has a relatively high proportion of workers outside the formal workforce, needs to be on guard as workers are facing a drastic reduction in working hours, wage cuts and layoffs, the ILO said.
“In India, with a share of almost 90% of people working in the informal economy, about 400 million workers in the informal economy are at risk of falling deeper into poverty during the crisis," ILO said. “In India, Nigeria and Brazil, the number of workers in the informal economy affected by the lockdown and other containment measures is substantial. Current lockdown measures in India, which are at the high end of the University of Oxford’s covid-19 Government Response Stringency Index, have impacted these workers significantly, forcing many of them to return to rural areas," it added.
The ILO warning corroborates local data, which shows that unemployment rate has spiked in India in a span of weeks.
The Centre for Monitoring Indian Economy’s weekly tracker survey showed that the unemployment rate shot up from 8.4% in mid-March to 23% in the week ended 5 April, reflecting job losses because of the 21-day lockdown that started on 25 March.
While urban unemployment rate was 30.9%, the rural unemployment rate was over 20%, the data showed.
Since there is no wage and income for a large portion of Indian workers, it is but natural that they are pushed into poverty, said Amarjeet Kaur, general secretary of the All India Trade Union Congress (AITUC).
“The lockdown and its impact cannot be restricted to just 21 days. It has a cascading impact. We are requesting companies and urging both states and the Union government to do their bit not only to protect jobs but also to protect wages. Unless wages are protected, it will lead to poverty. The ILO report is an eye-opener and a warning for all countries," Kaur added.
ILO has recommended a four-pronged approach, including focused stimulus package, support to enterprises and protection of jobs, during the current crisis.
“Without appropriate policy measures, workers face a high risk of falling into poverty and will experience greater challenges in regaining their livelihoods during the recovery period," ILO said.