Mumbai, India – A bright-orange sunset on an unseasonably cool evening last week did little to cheer up Lal Bahadur Sonkar. The 52-year-old hawker had failed to sell even one of his wares – sweetcorn grilled over hot coals, doused in butter and spices.
“The media is scaring everyone with these constant updates [on coronavirus] and people dying,” Sonkar told Al Jazeera. “No wonder the public is staying at home”.
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The next day, on March 20, Maharashtra state authorities ordered all “non-essential” shops” in Mumbai – India’s financial hub – to close until the end of March. It also warned citizens to maintain their distance in public, a process known as social distancing, to disrupt the spread of the COVID-19 virus that has killed nearly 17,000 people around the world.
Then on Tuesday, the central government ordered a 21-day lockdown for all of India’s 1.3 billion people to stay home, leaving only essential services such as food stores, fuel and banks to operate.
India currently has fewer than 1,000 confirmed COVID-19 cases, but with low testing rates this figure could be much higher. Fewer than 10 people have died of the virus, according to official data, with that number expected to rise significantly in the coming weeks.
The pandemic is yet another problem facing an economy already on its knees, with growth at a six-year low.
Sonkar, who previously served around 40 customers daily from his seafront stall, making around $133 a month, will now have to depend more than ever on his son’s call-centre salary to make ends meet. “The end of the month can’t come soon enough. I’m not sure how we’ll manage over the next two weeks,” he added.
The government has urged people to work from home. But that is not an option for around 81 percent of India’s workforce, comprising daily wage earners and the self-employed who have no paid leave, sick leave or other benefits to fall back on when demand for their goods and services dries up.
Living on the edge
“The cost of not working is very high for this group, which tends to live hand-to-mouth and earning little more than a subsistence wage,” explains Radhicka Kapoor, an economist at the Indian Council for Research on International Economic Relations (ICRIER).
Living in cramped, informal housing where access to washing facilities is more difficult means “these communities will also be the hotbed of the virus when community transmission begins,” she added.
“There’s not just an economic imperative but a moral imperative to keep these people afloat,” says Kapoor. “We need to do what is necessary now and think about the financial implications later”.
Several Indian states, including Uttar Pradesh and Kerala , have announced relief packages for casual workers and low-income groups. The central government is expected to follow suit soon, but for now, Prime Minister Narendra Modi has urged employers to treat workers with “empathy and humanity” and pay their wages as normal.
Though India is already in a “tight fiscal situation”, putting cash in the hands of those who need it the most is the best course of action under the circumstances, say many analysts including Sabina Dewan , executive director of the JustJobs Network and senior fellow at the Delhi-based Centre for Policy Research.
India’s fiscal deficit – the gap between government spending and income – currently amounts to 7.5 percent of the size of its economy, much higher than other developing economies such as Vietnam (4.4 percent) and Bangladesh (4.8 percent).
“The key here, though, is to make clear this is an emergency-based stipend, with very defined messages about when this subsistence will be stopped,” Dewan told Al Jazeera. “The risk is that these types of things become politically linked and then it’s hard for politicians to put an end to the cash transfer later on”.
Improvements to financial inclusion under India’s Jan Dhan-Aadhar-Mobile (JAM) infrastructure, which links mobile numbers to bank accounts and identity cards, should make a nationwide rollout of cash transfers easier.
Currently, several direct-benefit transfers are paid directly into the bank accounts of the poor, including about $80 a year to farmers as part of the government’s PM-Kisan income support scheme – the most recent example of a large-scale cash transfer.
But there will be “logistical challenges”, warns ICRIER’s Kapoor. India’s vast socioeconomic disparities between states and urban and rural areas makes identifying the appropriate transfer amount difficult. The government could also consider food handouts, she added.
But until then, many low-wage Indians will continue to suffer
“I’ve been roaming around looking for passengers, but it’s no use. People are barely travelling more than a mile from home” Ajay Kumar Gole told Al Jazeera. As the stocky rickshaw driver stopped to restock his supply of paan, a popular betel-nut mouth freshener, the 35-year old looked dejected. His takings were down 80 percent over the past ten days, he said.
Gole usually sends a few thousand rupees ($26) home every couple of weeks to Mirzapur district, in Uttar Pradesh state. But this month he says he will be keeping the money for himself. “Now they’ve announced some road closures. Maybe I’ll just go home for a while until things return to normal”.
But it is hard for analysts to predict how long and deeply the pandemic will hit India. In a recent note on COVID-19, the International Labour Organization (ILO) estimates that up to 25 million jobs could be lost globally.
ICRIER’s Kapoor suggests that even after the pandemic dissipates casual labourers could drop out of the workforce, as they grapple with poor health and their former sources of employment dry up. “We may also see people willing to work for a lot less,” she added.
Though virus cases have so far been centred in urban areas, the rural economy could also suffer as domestic remittance payments from city workers like Gole disappear and returning migrant workers transport the virus home.
But not everyone agrees that transferring cash directly to people’s bank accounts is good for the economy in the long term.
Some economists say that while cash transfers may alleviate immediate distress, they are expensive, unsustainable and cannot solve prolonged economic stagnation.
“If there are persistent effects, you want to revive the economy in a productive sense,” says Amit Basole , head of the Centre for Sustainable Employment at Azim Premji University. He suggests ramping up the government’s existing rural job creation scheme and extending it to urban areas as a way to combat businesses cutting back on labour costs.
As demand falls, supporting small businesses which form the backbone of economies like India will become increasingly important.
Basole says a good indication of what can happen to such firms during periods of crisis was the government’s sudden decision in 2016 to withdraw most of the country’s large-denomination currency notes, a move known as demonetisation.
An estimated 1.7 million jobs were lost in its aftermath, according to the Centre for Monitoring the Economy.
“We saw that if businesses couldn’t survive that period, it was very difficult for them to set up again and employ the same people,” Basole said.
Dagmar Walter, director at the International Labour Organisation’s Decent Work Team for South Asia and Country Office for India, agrees.
“Many casual and informal workers are directly or indirectly dependent on the survival of [small and medium enterprises] for jobs,” Walter told Al Jazeera, suggesting the government could lend support through “tax holidays and loans”, while banks could increase lending.
India’s Ministry of Labour and Employment has said it is looking at ways to increase the safety net for informal workers and a new Code on Social Security bill is currently making its way through parliament.
Some labour activists hope crises like the pandemic will help focus attention on such workers and address the issue of low-quality jobs.
“There is a worrying trend towards more informality and precarious employment”, says ICRIER’s Kapoor, pointing to the rise of gig-economy workers and the growing proportion of contract labourers across the organised manufacturing sector over the last 10 years.
“We need more protections for individuals regardless of the nature of one’s job – this should be a wake-up call”.