It has been almost three months since PM Narendra Modi first announced the nationwide lockdown on March 24. Initially, the 21-day lockdown was put in place to control the spread of this deadly virus, and not many people were worried because they could easily rely on their savings for 21 days.
But nobody knew that this lockdown could extend for another 45 days. In an economy like India, not all of them had enough savings to survive another lockdown.
Many people lost their jobs during this lockdown. Initially, PM Modi requested citizens not to cut salaries of home helpers and labours who worked in their businesses. But after the lockdown extended on April 15, many people lost their jobs. The unemployment rate shot up by 27.1 per cent in April end.
The Consumer Pyramids Household Survey reports that jobs in April 2020 decreased by an incredible 114 million. Employment already fell to 396 million in March 2020. In April 2020, even this dropped drastically by 29% to 282 million.
In 2019-20, average employment was 404 million. The decline in March, relative to this, was just marginally 2%. But 2 per cent is equivalent to 8 million job losses. In April, it fell by a massive 30 per cent, which means 122 million people lost their jobs compared to the same average of 2019-20.
One study found that after the lockdown, 84 per cent of households have been impacted by the loss of income. With revenues decreasing, Indians relied upon their savings to cover essential expenditures. However, these savings quickly dried up, especially for the poor section of the society.
In a moderate-income scenario, almost 92 million urban Indians (20 per cent of urban population) and 89 million rural Indians (10 per cent of rural population) have gone out of savings to cover basic needs after the first 21-day lockdown.
Because of the welfare schemes announced by the government for the poor section of the society, there is an assumption that people living in the rural part of India can rely on their savings to buy essentials till the end of June. But people living in urban areas will run out of their savings by the end of this month, which is 139 million Indians (30% of the urban population) will be in dire need of money to cover their expenditure on essentials.