Abstract
The COVID-19 pandemic has triggered multiple crises—of health, economy, and livelihoods—in India. The restoration of at least a part of the incomes lost by the overwhelmingly informal workforce in the country during the lockdown period should have been a priority for the government. However, the stimulus packages announced by the government have been inadequate, especially given the magnitude of the employment and livelihood crisis. Some of the policies taken in the wake of the crisis, such as the approval to increase daily working hours to twelve, have led to a weakening of labour’s position vis-à-vis capital. Rather than boosting economic growth, such measures will only worsen the deficiency in aggregate demand and prolong the recession. India’s policy-makers should reconsider the faith they have put in neoclassical economic ideas, which have slowed down employment growth and left millions of people with little access to basic health or education facilities. The pandemic should be an opportunity to build in India an effective and publicly provided social security system as well as rural infrastructure and research institutions.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Similar content being viewed by others
Notes
- 1.
Based on data obtained from https://covid19.who.int/, accessed 22 January 2022.
- 2.
The employment figures cited in this chapter are based on estimates from India’s National Sample Survey on Employment and Unemployment and Periodic Labour Force Surveys for the years 2017–2018, 2018–2019 and 2019–2020. See Thomas (2020a) for details.
- 3.
Based on data available at World Development Indicators, World Bank. From https://databank.worldbank.org/reports.aspx?source=world-development-indicators, accessed 15 January 2022.
- 4.
These 29 countries comprise China; India’s South Asian neighbours including Pakistan, Sri Lanka and Bangladesh; Brazil, Russia, South Africa, Nigeria, Turkey and Vietnam, which—along with India—are often described as ‘emerging’ economies; high-income countries including the US, Japan and the UK; and other selected countries in East Asia and the Middle East.
- 5.
In India, there are various ways in which the organised (or formal) sector is distinguished from the unorganised (or informal) sector. In industry, the organised sector is identical to the ‘factory sector’, which comprises units that employ more than 10 workers and operate with the aid of electric power. All units employing less than 10 workers fall into the unorganised sector. Employees in the formal sector are not all formal workers. In fact, there has been an increase in the number of informal workers—who may not have written job contracts and may not be eligible for leave or medical or social security benefits paid for by their employers—in the formal sector.
- 6.
Assume that X is value of output, K is capital invested, W is wages and P is profits. The profit share of output, π, is P/X, and wage share is W/X. The capacity utilisation rate (u) in the economy is X/K and the profit rate is P/K. The profit rate can also be expressed as profit share (π) × the capacity utilisation rate (u).
- 7.
Mehta (2019) shows how the BJP and its affiliate organisations changed their economic ideology over the years, from a commitment to swadeshi or economic self-reliance to welcoming globalisation and foreign investment.
- 8.
References
Azim Premji University. (2021). State of working India 2021: One year of Covid-19. Centre for Sustainable Employment, Azim Premji University.
Besley, T., & Burgess, R. (2004). Can labour regulation hinder economic performance? Evidence from India. Quarterly Journal of Economics, 119(1), 91–134.
Bhaduri, A. (2020). Reforming capitalist democracies: Which way? Working Paper 139/2020. Institute for International Political Economy Berlin.
Bhagwati, J., & Panagariya, A. (2012). India’s tryst with destiny, Harper Collins.
Bhattacharjea, A. (2009). The effects of employment protection legislation on Indian manufacturing. Economic and Political Weekly, 44(22), 55–62.
Chandrasekhar, C. P. (2021). The Indian economy before and after the pandemic. In Vikas Rawal, Jayati Ghosh, & C.P. Chandrasekhar (Eds.), When governments fail: A pandemic and its aftermath (pp.166–183). Tulika Books.
Drèze, J., & Sen, A. (2013). An uncertain glory: India and its contradictions: Development and participation. Princeton University Press.
Jaffrelot, C., & Schoch, C. (2021). Modi’s India: Hindu nationalism and the rise of ethnic democracy. Princeton University Press.
Keynes, J. M., (1933). National self-sufficiency. The Yale Review, 22(4), 755–769.
Lewis, A. (1954). Economic development with unlimited supplies of labour. Manchester School, 22, 139–191.
Marglin, S., & Bhaduri, A. (1988). Profit squeeze and Keynesian theory. Working Paper 39, World Institute for Development Economics Research (WIDER).
Mazumdar, S. (2021). The coronavirus and India’s economic crisis: continuity and change. In Vikas Rawal, Jayati Ghosh, & C. P. Chandrasekhar (Eds.), When governments fail: A pandemic and its aftermath (pp.184–208). Tulika Books.
Mehta, G. (2019). Hindu Nationalism and the BJP’s economic record. In M. Vaishnav (Ed.), Indian democracy and religious nationalism (pp. 63–72). Carnegie Endowment for International Peace.
Ministry of Finance. (2020). Economic survey 2019–20. Government of India. https://www.indiabudget.gov.in/economicsurvey/
Nayyar, D. (Ed.) (1994). Industrial growth and stagnation—The debate in India. Oxford University Press.
Patnaik, P. (2021). Globalization and the pandemic. In V. Rawal, J. Ghosh, & C. P. Chandrasekhar (Eds.), When governments fail: A pandemic and its aftermath (pp. 3–12). Tulika Books.
Patnaik, P. (Ed.) (2015) Economics: Volume 3: Macroeconomics. Oxford University Press.
Ramachandran, V. K. (1996). On Kerala’s development achievements. In Drèze, Jean & Amartya Sen (Eds.), Indian development: Selected regional perspectives (pp. 205–356). Oxford University Press.
Rawal, V., & Manish, K. (2020). COVID-19 lockdown: The crisis of rural employment. Available at https://coronapolicyimpact.org/2020/05/20/the-crisis-of-rural-employment/?fbclid=IwAR2F0jGTTfcUnGQ5ly1vnFyGdWt7IxskDQAjcpqnutZSELf9BkS68nQx2lc
Roychowdhury, A. (2018). Labour law reforms in India: All in the name of jobs. Routledge.
Shyam Sundar, K. R. (2020). What is wrong with the centre’s new labour codes. Newsclick, 22 September. https://www.newsclick.in/what-wrong-centre-new-labour-codes
Thomas, J. J. (2020a). Labour market changes in India, 2005–2018: Missing the demographic window of opportunity? Economic and Political Weekly, 55(34), 57–63.
Thomas, J. J. (2020b). India’s Poor may have lost Rs. 4 lakh crore in the Corona virus Lockdown. Scroll, 4 June. https://scroll.in/article/963284/indias-poor-may-have-lost-rs-4-lakh-crore-in-the-coronavirus-lockdown
Thomas, J. J. (2021a). Has labour rigidiy slowed down employment growth in Indian manufacturing. In Sunil Mani & Chidambaran G. Iyer (Eds.), India’s economy and society: Lateral explorations (pp. 327–352). Springer.
Thomas, J. J. (2021b). The achievements and challenges of the ‘Kerala Model’. The India Forum, 2 July.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2022 The Author(s), under exclusive license to Springer Nature Switzerland AG
About this chapter
Cite this chapter
Thomas, J.J. (2022). COVID-19 and The Indian Economy: The Debate About a Wage-Led Recovery. In: Lazzarini, A., Melnik, D. (eds) Economists and COVID-19. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-05811-0_3
Download citation
DOI: https://doi.org/10.1007/978-3-031-05811-0_3
Published:
Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-031-05810-3
Online ISBN: 978-3-031-05811-0
eBook Packages: Economics and FinanceEconomics and Finance (R0)