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July harder than June, migrants out of work hit economic wall at home

A key bellwether of activity in the manufacturing sector slipped in July after two months of steady growth reflecting the adverse impact of localised lockdowns by states to fight the surging Covid curve.

Written by Pranav Mukul , Aashish Aryan , Prabha Raghavan , Aanchal Magazine | New Delhi |
Updated: August 4, 2020 10:44:23 am
coronavirus lockdown, coronavirus lockdown impact, coronavirus economic impact, indian economy, covid 19 economy impact, migrants job losses, indian express Many of them are now realising that the rural economy has hit a saturation point and cannot absorb more workers.

A key bellwether of activity in the manufacturing sector slipped in July after two months of steady growth reflecting the adverse impact of localised lockdowns by states to fight the surging Covid curve. For those who lost their jobs, this fresh metric three months into the lockdown — PMI falling to 46 in July from 47.2 in June — is a disquieting reminder that a return to normalcy, or even a sustainable uptick, is far away.

More so for the thousands, who because of job losses or lacking a safety net if infected, moved from metros and urban industrial hubs to their hometowns and villages. Many of them are now realising that the rural economy has hit a saturation point and cannot absorb more workers.

Take Chittranjan Kushwaha.

The first in his family to hold a diploma in engineering, 30-year old Kushwaha went to Pune in 2014 and found an assembly line job with a major auto-component maker. Earning a monthly average of Rs 21,000, he was laid off in the lockdown and so returned to his family in Kushinagar, eastern Uttar Pradesh.

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Unlike many, Kushwaha got lucky: his diploma helped him get a job at a Common Service Centre (CSC) — but at less than one third of his Pune salary.

His expenses are down as he doesn’t have to pay rent but the drastic cut in income means he has to cut several corners. One big casualty: his children’s education.

“After schools closed, I paid fees for a month. After that I got them de-registered. How will I pay Rs 1500 for three kids?” he said.

Kushwaha’s case is emblematic of the crisis that has hit a majority of those who returned. Their scale is sweeping.

Official records show that of the 64 lakh migrant workers across 116 districts in six states — Bihar, Uttar Pradesh, Rajasthan, Madhya Pradesh, Jharkhand and Odisha (covered under the Garib Kalyan Rojgar Abhiyaan), a quarter returned to just 17 districts across these states.

The highest number of returned migrants under the scheme has been registered for Bihar, with 32 districts accounting for 23.6 lakh or 37.2 per cent of the total migrant workers covered, followed by Uttar Pradesh, with 17.47 lakh returned workers (27.5 per cent of the total) and Madhya Pradesh with 10.71 lakh workers or 16.9 per cent of the total.

Read| Rs 50,000-crore scheme to provide jobs for migrants returning home

The progress of the monsoon and a good summer sowing notwithstanding, the surge in Covid-19 case numbers in Bihar, Jharkhand and Uttar Pradesh is beginning to hurt the rural economy and so most of these workers are struggling to make ends meet.

The reduction in disposable income for many families comes on the top of an already increased household savings – a metric that indicates people start saving more than they spend to cover themselves in situations like job losses or pay cuts, which, in turn, is an indicator of a slump in the economy.

RBI records show net financial savings went up to 7.7% of GDP in 2019-20, compared with 7.2% in 2018-19.

“This improvement has occurred due to moderation in household bank borrowings being sharper than that in bank deposits, except in the fourth quarter of 2019-20 due to COVID-19 related economic disruptions…Several studies show that households tend to save more during a slowdown and income uncertainty,” the RBI noted.

Explained| Half of 30 lakh workers who returned to UP are unskilled, MNREGA the main avenue for jobs so far

Job opportunities, few and far between, for those who have returned home are largely coming from public setups. A number of states, including Bihar and Uttar Pradesh, have rolled out migrant labour employment schemes, in addition to the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA).

In all of the 116 districts covered under the Garib Kalyan Rojgar Abhiyaan, the number of households availing MGNREGA work in these districts jumped to 89.83 lakh during May — 86.27 per cent up from 48.22 lakh in the same month last year.

However, despite these efforts, several are still struggling to find a job.
Companies such as Maruti Suzuki India Ltd, India’s biggest carmakers, have been ramping up output but are largely relying on local workers since those from UP and Bihar are yet to return.

Deepak Kumar from Dhagar in Bhiwani district is among those who has queued up at Maruti’s Manesar factory over the past few days. With the facility restoring output to near normal levels, Kumar and other ITI diploma-holders from nearby towns in Haryana – many have prior work experience here — have responded to calls to return.

“My hope is that even if they keep me as a temporary employee, they should not ask me to leave soon,” Kumar said. Until he got the call, he said, he was “unemployed and working on a farm.”

Similar is the plight of Santosh Kumar, 32, from Dinapatti village in Supaul, Bihar. He ran errands at a small aviation logistics company in Mumbai but went back to his village in May in a three-wheeler auto-rickshaw along with three other persons.

“Right now there is a lockdown, how can I go back. I am relying on farming for survival in my village,” he said.

When will his company resume operations is anybody’s guess. While in the Centre’s financial package, micro, small and medium enterprises (MSMEs) were among the main intended beneficiaries, these are yet to recover from the impact.

According to a survey by CARE Ratings – conducted over two weeks from June 23 to July 7, one-third of the MSMEs faced revenue losses of over 50% in the last 3 months and over 60% have been unable to pay full salaries to their staff.

Santosh said he received the cash transfer of Rs 1,000 from the government and also got Rs 300 a day during the quarantine. The ration supplies are procured by the family through his father’s ration card as he is yet to get a ration card in his name. Santosh said he would like to return whenever his employer calls him back. That call could take longer now.

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