Introduction: the Critical Connection Between COVID-19 and Employment
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Introduction: the Critical Connection Between COVID‑19 and Employment Dev Nathan1,2,3 · Gerry Rodgers1
© Indian Society of Labour Economics 2020
The Indian Society of Labour Economics (ISLE), the Institute for Human Development (IHD) and the International Labour Organization (ILO), India Office, organized a two-day Virtual Conference on the COVID-19 Crisis and Employment on 8 and 9 June 2020. Many leading researchers from India and elsewhere participated. Short notes based on the presentations, along with some additional contributions, have been collected in this symposium in the Indian Journal of Labour Economics. The catastrophic impact of the pandemic on health and mortality has been widely documented elsewhere. Here we focus on the economic consequences. This Introduction sets the scene for the detailed analysis in the articles that follow.
1 Background The pandemic and the lockdown measures taken to contain the spread of COVID-19 did not create India’s current economic crisis. Rather, the lockdown measures exacerbated an already developing crisis. India’s growth rate had already almost halved from 8.0% to 8.2%, respectively, in 2015–2016 and 2016–2017 to just 4.2% in the year 2019–2020 (RBI 2020), which ended on 31 March 2020, just a week after the lockdown started. Thus, the Indian economy was already facing falling growth even before the pandemic struck. A key macro-economic factor in this falling growth rate was the decline in saving and investment over the last decade. Gross fixed capital formation fell from 34% of GDP in 2011–2012 to 28% in 2019–2020. This was part of a broader problem of inadequate aggregate demand to sustain a high rate of growth, * Dev Nathan [email protected] Gerry Rodgers [email protected] 1
Institute for Human Development, Delhi, India
2
Society for Labour and Development, Delhi, India
3
GenDev Cente for Research and Innovation, Gurgan, India
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Vol.:(0123456789) ISLE
The Indian Journal of Labour Economics
which could also be seen in the declining share of exports from 24.5% of GDP to 18.4% during the same period, and signs of a shortfall in household consumption, suggested by the NSSO household consumption survey in 2018–2019, which showed a decline in monthly per capita expenditure. There were therefore several indicators of a rapidly emerging crisis of growth in the Indian economy. 1.1 Lockdown into Recession In India, the policy response to counter the spread of COVID-19 was one of the strictest lockdowns in the world. Not only did factories, offices and transport services close down, but the lockdown equally hit the vast informal sector. It was announced with only a few hours notice, and without any income support for those who had lost their employment and livelihoods. Within a few days, once the poorest had exhausted whatever meagre savings they had, there began the tragic spectacle captured on TV sets in India and around the world of millions of migrant workers and their families walking back to their rural homes, often hundreds of kilometres a
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