This report documents the impact of one year of Covid-19 in India, on jobs, incomes,
inequality, and poverty. It also examines the effectiveness of policy measures that
have thus far been undertaken to offer relief and support. Finally, it offers some policy
suggestions for the near and medium-term future.
When the pandemic hit, the Indian economy was already in the most prolonged
slowdown in recent decades. On top of this, there were legacy problems such as a slow
rate of job creation and lack of political commitment to improving working conditions
which trapped a large section of the workforce without access to any employment
security or social protection.
covid and unemploment
Our analysis shows that the pandemic has further increased informality and led to a
severe decline in earnings for the majority of workers resulting in a sudden increase
in poverty. Women and younger workers have been disproportionately affected.
Households have coped by reducing food intake, borrowing, and selling assets.
Government relief has helped avoid the most severe forms of distress, but the reach of
support measures is incomplete, leaving out some of the most vulnerable workers and
households. We find that additional government support is urgently needed now for
two reasons – compensating for the losses sustained during the first year and anticipating
the impact of the second wave.
March 2020 and December 2020
Our main data sources are the Consumer Pyramids Household Survey from the Centre
for Monitoring the Indian Economy, the Azim Premji University Covid-19 Livelihoods
Phone Survey (CLIPS) and the India Working Survey (IWS) (see Appendix of the report
for details). We also draw on a large number of other Covid impact surveys conducted by
Civil Society Organisations and researchers. In this Executive Summary, unless otherwise
indicated, all estimates are from CMIE-CPHS. Most data pertaining to the period between
March 2020 and December 2020. We compare these months to pre-Covid periods as
appropriate.
At the time of writing, the country is in the throes of the second wave of infections and
renewed restrictions on mobility. Hence findings presented here must be regarded as
provisional. Neither the short-term impact nor the longer-term effects are fully clear. But
this analysis can form the basis for policy action as we find ourselves in the midst of the
most severe humanitarian crisis in recent memory
1 / Employment and incomes bounced back in
June 2020 but recovery remained incomplete
a. About 100 million lost jobs during the nationwide April-May 2020 lockdown. Most
were back at work by June 2020, but even by the end of 2020, about 15 million workers
remained out of work. Incomes also remained depressed. For an average household of
four members, the monthly per capita income in Oct 2020 (I4,979) was still below its
level in Jan 2020 (I5,989).
b. As a result of the employment and income losses, the labour share of GDP fell by over
5 percentage points from 32.5% in the second quarter of 2019-20 to 27% in the second
quarter of 2020-21. Of the decline in aggregate income, 90% was due to reduction in
earnings, while 10% was due to loss of employment. This means that even though most
workers were able to go back to work they had to settle for lower earnings.
c. Job losses were higher for states with a higher average Covid case load. The map shows
a state-level job loss representation index, or the ratio of the state’s share in jobs lost to
its share in India’s workforce. Maharashtra, Kerala, Tamil Nadu, Uttar Pradesh, and Delhi,
contributed disproportionately to job losses. Mobility restrictions, such as those caused
by lockdowns, predictably led to income losses due to decreased economic activity. We
find that a 10% decline in mobility was associated with a 7.5% decline in income. This
number is useful to keep in mind when estimating the impact of future lockdowns.
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