Coronavirus Destroys 120 Million Jobs as Curve Defies India’s Lockdown

The novel coronavirus pandemic has wrecked economies around the globe and India is no different. According to the latest data from the Centre for Monitoring of Indian Economy (CMIE), unemployment in the country surged to 27.1 percent for the week that ended on May 3. The CMIE points out that as many as 121.5 million Indians lost their jobs in April as the country remained in lockdown throughout the month.

India’s unemployment rate stood at 6.74 percent on March 15, just over a week before the lockdown was initiated. The lockdown is now in its seventh week, and the bad news is that cases continue to spike despite the efforts to contain the COVID-19 spread. On April 30, India had close to 35,000 coronavirus cases. By May 5, that case count ballooned to nearly 50,000. The daily case count has started spiking as evident from the 3-day moving average.

As the case count spikes in May, there are chances that the government may be forced to extend the lockdown once again. The south Indian state of Telangana has already extended the lockdown until May 29. It won’t be surprising to see more states going down the same path if the current trajectory continues.

Another lockdown extension could spell more trouble for the economy that was already in tatters last month. According to IHS Markit, the Indian economy contracted at a staggering annual rate of 15 percent last month. Economic contraction for the April-June quarter is pegged at 5.2 percent, according to a Reuters poll. But if April numbers are anything to go by, the actual contraction could be much more severe. The Purchasing Manager’ Index (PMI) for India’s services industry plunged to just 5.4 in April as compared to 49.3 in March. Any number above 50 indicates economic expansion. The composite PMI also fell to just 7.2 in April from 50.6 in March, the lowest on record.

The Indian government had announced a $23 billion stimulus package at the end of March to aid the poor who were impacted by the lockdown. That was not even 1 percent of India’s $2.7 trillion GDP. The problem is that India doesn’t have much fiscal headroom to provide stimulus packages.

Coronavirus Destroys 120 Million Jobs as Curve Defies India’s Lockdown, CCN, May 6