Impact of COVID-19 on Informal Economy: The Revival
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Impact of COVID‑19 on Informal Economy: The Revival Jeemol Unni1
© Indian Society of Labour Economics 2020
1 Introduction According to the Centre for Monitoring Indian Economy (CMIE), an estimated 122 million people lost their jobs in April 2020 alone and three-quarters of these were small traders and wage labourers, mainly in the informal sector (Thomas 2020). Estimate from the PLFS 2017–18 showed that of 471 million workers nearly 21% were self-employed. Casual labourers in agriculture were estimated at 50 million and 64 million in non-agriculture in 2018. Thomas computes the labour share of income in the GDP at 30% in 2018. Extrapolating from the 2018 figures, Thomas makes a bold estimate of loss of Rs. 4 lakh crores of income among the vulnerable workers in the 2 months of lockdown since 25 March 2020 (Thomas 2020). Further, according to Pranob Sen, Chief Statistician of India, unemployment rates are expected to rise to 8.5% in the financial year 2021 (Suneja 2020). Whatever the estimate of loss of GDP, our interest is in the income loss and suffering of the workers and their households and the compromises they make to survive the crisis. Forecasts and estimates are useful. However, policy-making also requires a deep dive down into the micro-context of who, what, where, why and how, in a disaggregated fashion, to reach and benefit the concerned workers and enterprises. In this brief paper, I touch on some of these micro-issues concerning enterprises and workers and certain short-term and medium-term strategies for revival of the economy.
2 Micro‑Enterprises India recorded 63 million MSME,1 employing 107 million people, in 2018–2019 (Government of India 2020). The Economic Census (EC), 2013, estimated that 72% were own account enterprises that did not hire workers on a regular basis and 1
Micro, Small and Medium Enterprises (MSME).
* Jeemol Unni [email protected] 1
Ahmedabad University, Ahmedabad, India
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operated with their own family labour. Of the total enterprises, EC 2013 estimated that nearly 36% were operated from household premises. The small scale of operation of such micro-enterprise, own account and home based, makes them particularly vulnerable to an economic shock such as the lockdown. A recent survey by All India Manufacturers’ Organisation (AIMO) in association with nine other industry associations, conducted during 24–30 May 2020, noted that a third of the self-employed, small and medium enterprises were on the verge of closing down (Magazine 2020a, b). In the AIMO Survey of 42, 525 MSMEs, 32% of the respondents felt their units were beyond recovery and 29% said it would take 6 months to recover. A former president of AIMO stated that the reason for closure of units was not the recent crisis alone, but earlier demonetization and implementation of GST over the last 3 years and the economic slowdown which had already left them stressed (Magazine 2020a). Change in definition of MSME: A day after Unlock 1.0 the Union Cab
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