Coronavirus effect: India's unemployment rate surges to double digits

Government asked to utilise ESIC funds to pay unemployment allowance

The unemployment rate in India has spiked to an unprecedented double-digit numbers as lockdown to battle the coronavirus pandemic has hit the livelihoods of the daily wagers and gig workers. This has led to a growing demand for starting unemployment allowance for such workers in the country on the lines of western countries.

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According to the data available with the Centre for Monitoring Indian Economy (CMIE) on April 12, the 30-day moving average of unemployment rate in India stood at an alarming 13.5% -- surging for the 17th consecutive day.

Since the nationwide lockdown was enforced on March 25, 2020, the unemployment rate has almost doubled from 7.58% on a monthly average basis.

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The last time India saw the unemployment in the double-digit range, it was only for urban unemployment numbers, which had spiked to over 11.5% in August 2016. However, as the rural unemployment rate, the sector which has been gripped with disguised unemployment, were low, the overall numbers never went into the double digits.

However, as agricultural activities are also witnessing the lockdown this time, the rural unemployment rate has also surged into double-digit territory. As of date, the 30-month moving average unemployment rate for urban areas stands 14.53%, while that of rural areas stands at 13.08%.

What has been adding to the growing unemployment is the fact that most gig workers and daily wagers, many of whom were the migrant labourers, are rendered jobless, as non-essential economic activity has ceased across the country in a bid to stop the spread coronavirus pandemic. The migration of the migrant labourers, who usually work on Dihadi basis (daily wage basis) and have been rendered jobless, has been a cause of concern to both central and state governments.

The numbers are likely to deteriorate further, as the hit is even harder in the month of April. According to CMIE, in the first week of April, the unemployment rate was 23.8%. The labour participation rate fell to 39% and the employment rate was a mere 30%, according to the CMIE.

According to this data, which CMIE had put out last week, 1.5 crore Indian workers were rendered jobless in a span of just three months from January to March, as Covid-19 started to take a massive hit on the global economy.

"What has happened between January and March is that the number of employed fell from 411 million to 396 million and the number of unemployed increased from 32 million to 38 million," it said in a note.

Call for unemployment allowance

As a result of this, the demand for payment of unemployment allowance is gaining traction.

Karnataka Employers Association (KEA) has demanded payment of allowance to unemployed workers out of the corpus available with the Employees State Insurance Corporation (ESIC). "ESIC is in possession of funds to the tune of Rs 84,000 crore and it can be used to pay to the unemployed workers at least for the next three months," B C Prabhakar, Lawyer and President of KEA told DH.

In a letter sent to the Union Ministry of Labour and Employment, he said the ESI Corporation, under a scheme named ‘Atal Beemit Vyakti Kalyan Yojana’ (ABVKY), provides relief to an Insured Person who is rendered unemployed to the extent of 25% of the average per day
earning during the previous four contribution periods to be paid up to maximum 90 days of unemployment once in a lifetime of the insured person. This scheme may kindly be modified to provide 50% relief during the COVID-19 period.