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Vijay Ram S
The Covid-19 pandemic led to a grave economic crisis and stark collapse of employment in India. Even after the nation-wide lockdown was relaxed, the unemployment rate crossed 12%, as per estimates by the Centre for Monitoring Indian Economy (CMIE). While it is the government’s responsibility to support the people during such a crisis, its response has only further worsened the situation. Even now, when the government claims that all is well in the economy and the country is on its way to becoming a 5 trillion dollar economy, the estimated unemployment rate is 8.10% (as of February 2022). On the other hand, it was 6.3% and 4.7% in 2018-19 and 2017-18 respectively.
The pandemic had a devastating effect, particularly on the employment of youth and women. According to CMIE, nearly 3 crore youth between the ages of 20 and 29 were unemployed in 2021, and they accounted for around 85% of the total unemployment in the country. The already abysmally low female labour force participation rate further declined due to the pandemic.
Despite having the policy and economic resources to mitigate the effects of the pandemic on employment, the government repeatedly refused to use them. In fact, the government’s response can only be described as miserly. While even the dogmatically capitalist G20 countries relaxed their fiscal rigidity and spent money, the Indian government refused to do so. Instead, it chose to stick to supply-side measures, like tax breaks for corporates, low-interest loans and improving the “ease of doing business”. These measures have had little to no effect on improving the economy or employment.
It is quite obvious that only increasing fiscal spending can be the solution to a crisis of aggregate demand, caused by unemployment and a fall in incomes during the pandemic. Increasing the incomes of the poor through measures like increased rations, rural and urban employment guarantees and direct cash transfers will increase aggregate demand. An increase in demand will enable MSMEs, which generate a substantial share of employment, to find their legs again. However, increasing fiscal spending would not be possible as long as the government holds on to its obsession with having a small fiscal deficit. Even in the 2022-23 budget, the government has no specific policies for employment generation. The budget for MNREGA, which has been crucial to generate employment in the rural economy and is an important lifeline for the rural poor, has been slashed by 25%.
This obsession with the fiscal deficit is a result of the priority the Indian government gives to the stock and bond markets, investor confidence, ease of doing business, attracting foreign investment and the like, which have never led to commensurate employment generation. The government has also used the pandemic as an excuse to further push its neoliberal agenda. It has implemented a range of neoliberal reforms that favour global finance capital, like the deregulation of markets and privatisation of public sector enterprises. Many of these reforms, such as the New Education Policy and the labour codes were already on the agenda of the government even before the pandemic. These policies have only served to benefit the already super-rich. Corporations have shored up their profits and continue to make record gains while doing nothing for investment or job creation. According to the Oxfam Inequality Report 2022, the number of billionaires in India increased from 102 to 142, while the incomes of 84% of households in India decreased in 2021.
Meanwhile, the employment situation in the country continues to worsen. Employment generation has been sparse both in the rural and urban contexts. Even the few jobs that have been created are of bad quality. They are mostly in the informal sector and do not provide any form of social security to workers. Contracutalisation has become the norm and industries continue to exploit labour by inventing new categories outside of proper employment such as on-the-job training and apprenticeship. The massive increase in gig work has led to the emergence of a large, new category of precarious workers. While the government may claim that a record number of jobs are being created through such avenues, such jobs that do not provide decent work to workers and do not have any form of social security only serve to intensify the exploitation of workers and increase profits for capital.
In essence, through its pandemic “reforms”, the government has successfully further shifted the balance of power between global finance capital and labour in favour of the former. It has done only lip service and given false promises to workers while actively working against their interests. The Indian state has fully capitulated to global finance and its neoliberal capitalist ideology. When asked to bend, it crawls. Even when custodians of global capitalism, like the IMF, suggest that countries should increase fiscal spending, India pays no heed. Such is the degree of surrender to the neoliberal ideology. According to the government, the COVID-19 pandemic is over. But India and the developing world are still suffering from the pandemic of global capitalism. Unless and until this malaise is gotten rid of, there can be no scope of creating decent work or recovery of the employment situation in India.
Vijay Ram S is a member of Collective
