Over seven million Indians lose jobs in April; rural India severely impacted

Livelihoods: India’s unemployment rate rose to nearly eight percent—the highest in four months—with at least 7.35 million job losses in April 2021. According to data from the Centre for Monitoring Indian Economy (CMIE), the number of employees—salaried and non-salaried—fell from 398.14 million in March 2021 to 390.79 million in April 2021.

The number of employed people was 400.7 million in January 2021 while the unemployment rate that month was 6.52 percent.

In rural India, a record 2.84 million salaried people lost their jobs in April 2021, reducing the number of salaried people in rural pockets from 30.72 million in March 2021 to 27.87 million in April 2021. This is the third consecutive month of job losses.

Job losses are being attributed to curbs announced to contain the second wave of COVID-19 such as lockdowns by state governments. This has motivated several people to move back to their home towns and villages.

For the salaried class in the rural belt, job losses have been almost four-and-a half times more than its counterpart in urban areas. This will adversely impact rural consumption and economic recovery, and push the middle class into poverty. The four key implications of this will be observed in spending, healthcare, poverty alleviation, and middle class well-being.

“The fall in the number of people employed is massive and it encompasses regular salaried workers, casual workers and self-employed. There are three problems now in the labour market—fall in the number of employed people, fall in labour force participation and the rise in people unemployed yet not looking for jobs. It’s a critical situation,” explained Arup Mitra, a professor of economics at the Institute of Economic Growth, Delhi University

April 2021 has seen a decline in the rate of labour force participation. Employment rates fell from 37.56 percent to 36.79 percent, which is a four-month low, and the number of people who were unemployed and yet not actively looking for jobs increased from 15.99 million in March 2021 to 19.43 million in April 2021.

“The increasing number of unemployed people not actively looking for jobs suggests people have withdrawn from the labour market; one, the infection has now spread to rural India; and, two, due to closures, there are not enough jobs available. Look at formal sectors like retail, hospitality, tourism and travel industries, and look at informal and semi-formal segments workers who were in household jobs, office support systems, etc. They have gone down significantly in April,” Mitra added.

The effect of the pandemic on the job market and economic activity is much more severe this year, especially in rural areas. Experts say that the government should take the necessary steps to provide financial support and provide jobs through employment schemes such as NREGA.

Read this article to understand how the Union Budget fails to address the problem of rural employment.

Fundraising & Communications: The Ministry of Home Affairs (MHA) has issued a circular extending the validity of FCRA registration certificates to September 30th, 2021. This applies to all FCRA licences that have expired or will expire between September 29th, 2020 and May 31st, 2021. The decision to extend the deadline has been driven by the exigencies arising from the COVID-19 situation.

FCRA refers to the Foreign Contribution (Regulation) Act 2010, which permits charitable organisations based in India to raise funds from foreign sources.

The order also clarified that nonprofits that have already opened an account and have the requisite permission to receive foreign aid, can henceforth receive it only in these newly-opened accounts.

The FCRA law was amended in September 2020 to include a clause that mandated that all nonprofits receiving foreign aid must necessarily open an account in State Bank of India’s New Delhi Main Branch. The government had initially set the deadline for this account opening as March 31st, 2021; it later extended it to June 30th, 2021 after several nonprofits argued in court that there had been delays because necessary approvals from MHA had not been received.

Several organisations have not been able to receive foreign funds during the crisis caused by the second wave, and this has impacted their COVID-19 relief efforts. Relaxing the foreign funding rules could significantly help organisations ramp up their operations to help individuals, supply critical healthcare equipment, and respond to communities in rural areas.

Read this article to know how amending the FCRA can have unforeseen implications.

Philanthropy & CSR: The Ministry of Corporate Affairs (MCA) has issued a circular that allows corporate spending on health infrastructure for COVID-19 care to qualify as corporate social responsibility (CSR) expenditure.

This includes setting up medical oxygen generation and storage plants, manufacturing and supply of oxygen concentrators, ventilators, cylinders, and other medical equipment to counter COVID-19.  

The announcement comes at a time when all efforts are being directed towards expediting efforts to support the country’s healthcare infrastructure.

According to the circular, companies can now undertake projects and activities in collaboration with other companies using CSR funds. Additionally, they can contribute to specified research and development projects, as well as publicly funded universities and certain organisations that conduct research in science, technology, engineering, and medicine.

The government had earlier clarified that setting up makeshift hospitals and temporary COVID-19 care facilities would also be considered a CSR activity. Rajesh Verma, the Corporate Affairs Secretary, has requested businesses to consider converting vacant office buildings into COVID-19 facilities to cater to the rapidly increasing caseload.

Read this article to understand why media attention on COVID-19 deaths due to lack of oxygen in big cities has skewed donor priorities.