With India coming to a standstill and its citizens cooped indoors to prevent the spread of Covid-19 cases, the informal or gig economy has ground to a halt. From those working in restaurants to those making a living by ironing clothes in the neighbourhood, daily wagers are finding it difficult to make ends meet.
“Work began slowing down 10 days ago and over practically the whole of last week, neither me nor my father have got any work. No one is allowing outsiders to enter their homes for fear of contracting the virus. Our first worry is lack of work. This new disease will get us much later," said Kumar, whose household has five members, including two children. His wife used to take up odd jobs of stitching and toy making, but she also hasn’t found work for about a week now.
More than 90% of the country’s workforce is estimated to be in the informal sector. The Economic Survey 2017-2018 had said that 87% of the firms in the country, representing 21% of total turnover, are purely informal, outside both the tax and social security nets.
The “new disease" Kumar refers to is the Covid-19 pandemic, which has caused seven deaths in India and infected more than 386 people so far. His concerns are largely reflective of India’s huge informal workforce.
“As revenue streams of firms get impacted, employment, particularly of daily wagers and temporary workers, will be in the firing line. Anecdotal evidence suggests hit to services such as restaurants, transport (including air and ground), entertainment/film industry, tours and travel, retailing and sports events, which could intensify if the crisis worsens leading to prolonged lockdowns," said a Crisil report.
The crisis has led to a mass exodus of migrant labour to villages. Many of Kumar’s acquaintances have returned to their homes in Uttar Pradesh and Bihar. The situation may worsen given the closure of trains services and states locking down. Demand has shrunk, affecting the source of income of daily-wagers such as Kumar.
There has been a growing demand for financial assistance to workers from the informal sector, following Prime Minister Narendra Modi’s announcement last week of the formation of a Covid-19 economic response task force under finance minister Nirmala Sitharaman. “The livelihoods of domestic workers, street vendors, auto or rickshaw drivers, construction and utility workers is at risk. We need to plan better to accommodate the needs of those who cannot fend for themselves in a situation of reduced or no demand in some cases," said Sangeeta Singh, programme head at Delhi-based National Association of Street Vendors of India (NASVI), which works for advocacy of livelihood rights.
Demands for regular payments to citizens as part of a universal basic income have also been gaining traction.
“Even among the informal sector, unorganized workers are the most vulnerable. The Union government could look at having an emergency fund to provide assistance for at least two months. The states too need financial support to tackle this pandemic," said Arbind Singh, chairman of the All India Unorganized Workers Congress, part of the Congress party, and also national coordinator at NASVI.
“Domestic help, cooks and maids have said they have been told not to come for two weeks or so. No early payment of salary to deal with the crisis, no clarity on whether they will face pay cuts or losing of jobs," said Maxima Ekka who is associated with the Domestic Workers Forum.
Some states are moving to provide assistance to the informal sector, but a lot is left to be desired. Uttar Pradesh chief minister Yogi Adityanath on Saturday announced that the state will provide a monthly financial assistance of ₹1,000 to the daily wage workforce, which may benefit an estimated two million registered with state’s labour department.
The pandemic comes at a time of an economic slowdown in India. Standard and Poor’s has cut its 2020 growth projection from 5.7% to 5.2%, as it fears the Asia-Pacific region may slide into a recession as countries implement strict lockdowns. Weighed down by a decline in the manufacturing sector, factory output contracted in December, while retail inflation accelerated for the sixth month in January, raising doubts about the recovery of the fledgling economy.
However, factory output unexpectedly expanded in January, while retail inflation eased in February. The National Statistical Office (NSO) said the Index of Industrial Production rose 2% in January compared with 0.1% growth a month ago while retail inflation eased to 6.58% in February from 7.59% in the previous month. NSO estimates economic growth to hit an 11-year low of 5% in 2019-20 on the back of sluggish consumption and investment demand.