<em>Mahua Venkatesh</em>.
Thousands of people could lose their jobs in the coming weeks even as India has so far managed to contain the number of deadly coronavirus cases to 125. The worst impacted would be micro, small and medium enterprises or MSMEs, which employ the highest number of people. Job loss will come up as one of the biggest challenges for the Narendra Modi government in the months to come.
The unemployment rate in India in February was 7.78 per cent, according to data released by the Centre for Monitoring Indian Economy (CMIE). In January the number was 7.16 per cent. The data also revealed that joblessness in the rural region was even more.
Traders and shopkeepers have already witnessed a near 20 per cent decline in sales with falling footfalls, though the supply chain has not been impacted until now. However, with imports coming to a halt, there could be problems with the supply of certain goods in the next one month if the situation does not improve. Several state governments have ordered shutdown of public places such as malls, gyms, clubs and cinema halls beside educational institutions, as India enters the most crucial phase in its fight against the virus. Global experience shows that the spread of the disease multiplies in the third or fourth week since detection of the first handful cases.
Many companies have opted for the work-from-home mode for their employees. Several countries have imposed travel bans and advised citizens to follow social distancing.
The Reserve Bank of India (RBI), which has already started taking measures, is likely to reduce interest rates in the next few days. It is equally important for the government to put in place fiscal measures to arrest the economic impact of COVID-19 and boost job generation.
A State Bank of India report suggested that the government must carefully use the large chunk of money that it saves from lower crude oil prices to carve out measures that can support employment generation.
Multilateral agencies such as the World Bank and the Asian Development Bank are likely to reduce global growth projections for 2020. The ADB estimated an overall global financial loss between $77 billion and $347 billion for the current year on account of the spread of the deadly disease. The magnitude of the economic losses will depend on how the outbreak evolves..
