Salaries uncertain? Over one-third of urban workers face economic threat; these 5 states may suffer most

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Updated: April 6, 2020 6:08:09 PM

Income shock to migrant workers has resulted in a massive reverse migration, the effects of which will only unravel over time.

informal economy, migrant workers, unorganised sector, economic crisis, KPMG, lockdownRajasthan, Punjab, Andhra Pradesh, Chhattisgarh, and Gujarat are likely to face the maximum hit as nearly half of their workforce is from the informal sector. (Bloomberg image)

More than one-third of the regular wage or salaried employees in urban India may bear the brunt of uncertain income due to the stalling of urban activity. Rajasthan, Punjab, Andhra Pradesh, Chhattisgarh, and Gujarat are likely to face the maximum hit as nearly half of their workforce is from the informal sector. Adding to it, the income shock to migrant workers has resulted in a massive reverse migration, the effects of which will only unravel over time, said a KPMG report. Workers in the urban areas are expected to be substantially affected by the coronavirus scare as a significant fall in urban transactions could lead to a steep fall in the consumption of non-essential goods.

The impact would be even more severe if domestic supply chain disruption caused by the 21-day lockdown starts to affect the availability of essential commodities too, the KPMG report added.  Since India depends significantly on the global markets, the challenges from domestic as well as global spillovers could be a double whammy for the country. Considering this, it is expected that the prolonged lockdowns would catalyse economic troubles and India’s growth may fall below 3 per cent under this scenario.

Meanwhile, the tourism and hospitality industry may face a potential job loss of around 3.8 crore, which is around 70 per cent of the total workforce. The hospitality sector is also one of the early few to have faced the highest impact of the pandemic outbreak, with the segment possibly staring at massive financial and employment losses.

Also Read: Raghuram Rajan’s fear: Migrant labour’s return to cities in search of work; here’s why it would be bad

Around a quarter of over 7.5 crore MSMEs in India will face closure if the lockdown due to COVID- 19 goes beyond four weeks and this figure is estimated to touch a whopping 43 per cent if the situation extends beyond eight weeks, KPMG report said citing a study by the All India Manufacturer’s Organisation (AIMO). The expected impact is horrifying as the sector the MSMEs provide employment to more than 11.4 crore people and contribute around 30-35 per cent to the GDP.

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