Rural India has erased gains made since October when the coronavirus infection had begun to decline to record 2.84 million job losses in April for the salaried class alone. This is expected to impact rural consumption.
Salaried people in India’s rural pockets stood at 27.87 million in April, down from 30.72 million in March, and 33.46 million in February, showed monthly data from the Centre for Monitoring Indian Economy (CMIE). Around 5.59 million salaried employees lost their jobs during April and March.
This shows how the second wave of the pandemic has unleashed its wrath on the rural jobs market.
Job losses for the salaried class in India’s rural belt were almost four and half times more than the number of salaried jobs lost in urban pockets in April. Overall, 3.4 million salaried jobs were lost during the month.
Economists said the development will have an adverse impact on rural consumption and economic revival, and push the middle-class into poverty. “The magnitude of the problem in rural India is huge, but policy response to it has been very low. We are still struggling with oxygen and critical care breakdown in urban India. The salaried job loss in rural India will have a cascading impact on several sectors,” said Sunil Kumar Sinha, principal economist of Indian Ratings and Research, a Fitch Group company.
“The second wave of the covid-19 and job loss in rural India is leading to four key implications on spending, healthcare fear, on poverty alleviations and middle-class well-being. The discretionary and non-discretionary spending on automobiles including motorcycles, small cars and tractors and general demand for consumer durable will get hit. What we are not realizing is that the coronavirus in 2021 is much more severe in rural India.”
Sinha said the spread of the pandemic this year is swift and called for immediate government action in terms of a stimulation package and financial support to people and more allocation to rural jobs scheme.
Arup Mitra, a professor of economics at Delhi University, concurred. While agriculture incomes may not get hampered this year, non-agriculture incomes have taken a beating and will show its implications on the consumption story, he said.
“People drive consumption and if they don’t have jobs, and more so in rural India, then that rural consumption cushion we enjoyed last year may not be there. The year 2020 saw millions slipping into poverty, following the lockdown and this year, the situation may get worse,” he added.
Mitra said the government’s national rural employment guarantee scheme (NREGS) may need more fund allocation, as job losses in rural India will push people to informality and demand for MGNREGA jobs will therefore increase.
Employment rate in India is already down and the next two to three months could be critical for the jobs market. According to the CMIE, the employment rate fell to a four-month low from 37.56% in March to 36.79% in April.