As COVID-19 cases continue to rise in the country and there are talks of return of lockdowns, the Centre for Monitoring Indian Economy (CMIE) has said that increasing the pace of vaccination and maintaining social distance is a much better strategy than imposing another lockdown, which hits the economy and costs jobs.
India reported 56,211 new COVID-19 cases in the preceding 24 hours on Tuesday. Maharashtra Chief Minister Uddhav Thackeray had last week warned of another lockdown and asked officials to prepare a plan for implementation of a lockdown with minimum impact on the economy.
"Science has delivered vaccines against the virus. Efficient administration of inoculations along with sustained discipline in maintaining physical distance is a better strategy than a draconian lockdown. We read the chief minister's warning more as a prod towards this discipline than a real threat of a real lockdown," CMIE Managing Director Mahesh Vyas said.
Saying that the livelihood cost of a lockdown is too high, Vyas said average household incomes fell by 9.2 per cent in March 2020 and by 27.9 per cent in April 2020 as a result of the lockdown.
India had imposed a nationwide lockdown from March 25 last year to control the spread of coronavirus infections. The lockdown continued for over a month, with the government gradually relaxing rules to allow economic activities to take place.
Vyas said the economic impact of the lockdown was felt even after over six months as household incomes had not repaired to their pre-lockdown levels in October 2020. Average household income in October 2020 was 12 per cent lower than it was a year ago.
"Given that employment in October 2020 was also lower than it was a year ago, aggregate household income was even lower than the average household income," Vyas said in an article.
The lockdown led to job losses and an increase in unemployment, with employment down by 7 million to 399 million in February 2021 from the year-ago period. "Qualitatively, employment in February 2021 is not the same as the employment in February 2020. The current employment is a lot less fruitful than it was a year ago," CMIE said.
Besides, it said the loss in non-farm jobs was much higher as farm jobs are often just disguised unemployment. Productivity levels are low and they drop further when job losses in the non-farm sectors lead to an influx of additional labour. Hence, a recovery in employment needs to be seen in non-farm jobs.
"However, the loss of jobs in non-farm sectors between February 2020 and February 2021 is of the order of 11.6 million...we compare non-farm jobs in February 2021 against the average non-farm jobs during 2019-20 and find that the loss is of the order of 11 million," it said.
The loss of these 11 million jobs due to lockdown was almost equally spread among business persons, salaried employees and daily wage earners. Comparing employment in February 2021 to the average of 2019-20 showed a loss of 3 million jobs among business persons, 3.8 million jobs among salaried employees and 4.2 million jobs among daily-wage earners.
"The recovery of jobs seems to have stopped 2 per cent short of its earlier level. And, recovery of non-farm jobs seems to have stopped 4 per cent short of its earlier level. It is important that a fresh lockdown does not make this worse," Vyas said, adding that vaccination and masks are a better bet.
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