The pandemic has got into focus the debate on lives versus livelihood. All over the world, major countries have announced a lock down which has put sinking-world economies into questioning whether a lock-down is necessary especially for those who survive on daily-wages in order to get two-square meals a day.
On 23rd March 2020, the announcement of the lock-down led the urban poor in the lurch without any job in-hand and a family to fend for. It has left them on a crossroad where the only way for them was to go back to their homes in far off misfile towns and villages. The social and electronic media has put forward heart-breaking pictures of men with their families, young children and belongings walking on the highways to reach their destinations with no support. This mass movement of migrant workers was unanticipated by policy-makers and people at the helm of affairs when the announcement was made. For days, they have been walking without water and food until some state governments have come forward with some transport facility – better late then never.
While the middle-class and the rich might survive a lockdown for a couple of months, majority of the world population will be unable to sustain themselves because of the lock-down. Some businesses are on verge of bankruptcy such as aviation, and developing countries like India might not be able to take the blow of economic activities coming to a standstill.
In a recent report by Centre for Monitoring Indian Economy (CMIE), as of 3rd May 2020, more than 121 million Indians are unemployed including 17.8 million salaried class have also lost their jobs – that means even middle-class is hurt as a result of the lockdown. Before lockdown was announced, unemployment rate was under 7 percent in mid-March. In other words, lockdown has done more damage to the economy then demonetization and Good and Services Tax (GST) combined.
Now, if we do sector-wise analysis it shows that some sectors are more affected than others which include aviation, tourism and hotels, real estate, service sectors such as salons, restaurants, gyms, besides the banking and financial markets. For example, in case of financial markets, as of 4th May 2020, more than 5 lakh crore investor wealth has been eroded in the stock market, and given that India has no social security net this could have implication for the elderly population the rely on the markets for a monthly-income as bank interest rates have been falling rapidly.
The PMI (Purchasing Manager’s Index) in the month of April 2020 is at record low of 27.4 – which means consumer demand has contradicted sharply in the absence of jobs, this in-turn give signal to manufacturing sector to reduce production so that there will be no inventory build-up. This will have serious consciousness on the GDP, and will result in further lay-offs of people on the shop-floor and production line.
Last report of the Micro, Small, Medium Enterprise (MSME) sector shows growth in single-digit number. This growth will be further impacted by the lock-down. Nitin Gadkari, Minister of Micro, Small and Medium Enterprises (MSMEs) has said that government must announce a package for MSMEs soon as ‘they are in verge of collapse.’ The Reserve Bank of India (RBI) has substantiated what the minister has said with figures as on 13th April 2020 that show that Micro and Small Enterprises year-on-year (Y-O-Y) growth 2020 is at – 0.4% ;Medium Enterprises at 3.9% and Large Enterprises within MSMEs at 0.7%.
Given the macro-picture, and micro-sector-wise data – there appears to be an urgent need for the policy-makers to address the economy as a whole and suggest, implement ameliorative measures on an SOS basis before it becomes completely comatose and beyond recovery.
It is therefore, clear that sustaining livelihood is more important with adequate checks and balances in terms of protocols in a covid ridden scenario to have the right mix of economic growth and livelihood.