Economic Fallout of COVID-19 and State Policy Response for Labour Force Protection

Economic Fallout of COVID-19 and State Policy Response for Labour Force Protection

Rakesh Kumar (Deen Dayal Upadhyaya College, University of Delhi, New Delhi, India)
DOI: 10.4018/978-1-7998-7495-9.ch003
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Abstract

The outbreak of coronavirus disease (COVID-19) has posed multi-faceted socio-economic threats globally and nationally. India is believed to be among the worst affected countries for imposing longer and extensive lockdown. The Indian economy is projected contract significantly due to nationwide longer lockdown. The closing of all sorts of economic activities created livelihood challenges for industrial workers. This chapter highlights the potential challenges and state policy response for protection of the lives and livelihood of the labour force. Indian government undertakes many measures on the fiscal and monetary part to minimize the health and economic fallout of labour force. Due to robust policy response, Indian economy is projected to report an economic growth rate of 11% in 2021 amid the rebound of global economy and easing of lockdown restrictions. The government has announced a number reforms for agriculture and industrial sectors, especially for micro, small, and medium enterprises (MSMEs) for larger absorption of labour force through increasing the output base.
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Introduction

The outbreak of COVID-19 pandemic has shocked the whole world with far reaching socio-economic consequences even more than that of the global financial crisis of 2008 and the Great Depression of the 1930s. The categorisation of the disease as a pandemic by World Health Organisation (WHO) has fuelled the panic further across the world. India has been expected to be hardest hit country among the others because of high population density and home of 1.4 billion people. Acknowledging the crisis, the Indian Prime Minister Narinder Modi called the meeting of leaders from the South Asia Association for Regional Cooperation (SAARC) through video conference, thereby stressed upon the need for chalking out the coordinated strategy at the regional level. The SAARC leaders met after 5 years since the cancellation of 19th SAARC meeting scheduled to hold in Pakistan in November 2016 (see Kumar 2020). An Emergency Fund focusing the financial needs to deal with pandemic at the regional level was proposed in the meeting, taking the total contribution worth to $21.3million, along with other important measures were discussed for containment of the disease.

Till the end of May 2020, India remarkably contained the spread of pandemic and death tolls because of taking early preventive measures. At the time of spreading of pandemic at faster rate in European countries, India including other countries from South Asia region like Pakistan, Bangladesh and Sri Lanka and other smaller nations which are home of 1.8 billion people, so far have reported comparatively smaller number of cases of infection and death toll of human lives. However, health experts expressed the fear that these countries could be the next epicentre of the disease if strict preventive measures were not taken at the full scale. Due to lack of data and any viable strategy for containment of disease coupled with limited scientific understanding of causes for the growth of virus, it becomes difficult to assess the human and consequent economic impact of the disease at that time. In the absence of any effective strategy for the containment of virus, it is estimated that India would have over 30 crore infected cases with millions of death tolls (see, Economic Survey 2021, Government of India).

During the period of lockdown intended to stop the transmission of disease among the human beings, the migrant workers across the country are seen hardest hit due to halt of all economic activities. They found themselves anxious about their livelihoods and work which made them to leave the cities for their villages. The anxieties of migrant workers were triggered by many of the factors. First, they were abandoned by their employees because of closure of factories, shops, restaurants, hotels and all sort of economic activities were shut. Second, they were living in small houses in cities with close physical proximity; hence practically it was impossible for them to follow social distancing as preventing measure to contain the disease. Third, the tendency to live with the family amid the human crisis had forced them to leave for their villages. There reasons have found the prominent ones among the others which led the mass exodus of workers from cities to villages.

It is found that majority of migrant workers were daily wage earners who lost their livelihood (see, the report of Jan Sahas 2020). Jan Sahas further report that they were left with no rations, money and access to food and water due to lockdown. The migrant workers travelled hundreds of kilometres by foot because of halt of all modes of transportations due to lockdown. The policy makers have faced the criticism due to their plight, thereby has raised the questions over the manner in which sudden lockdown has been announced. The announcement of sudden lockdown delayed the transmission of pandemic but has failed to contain it. By the end of June 2020, India surpassed UK, Italy and France, and became the third worst affected country after USA, Brazil (see, Ghosh, 2020). In this backdrop, this chapter underlines the facts on the economic fallout caused by lockdown, in addition highlights the measures which have been taken as a state policy response to mitigate the potential economic and job loss of labourforce.

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