An Indian factory worker. As the country faces a power crisis, some firms may have to close. Photo: Twitter

India’s Covid-19 second wave is now fueling unemployment with many states announcing localized lockdowns to battle burgeoning cases.

Unemployment rose to a four-month high of 7.97% in April, from 6.5% in March and 7.5 million people lost their jobs during the period, says the Center for Monitoring Indian Economy, a privately run think-tank.

On Saturday, India became the first country to record more than 400,000 new cases. The second wave death toll has been higher than in the earlier wave and on Sunday a record 3,689 people lost their lives. The country’s caseload since the pandemic began a year ago has crossed 20 million.

The think-tank’s managing director, Mahesh Vyas, said considering the enormity of new cases and its toll on the health infrastructure, the employment situation may not improve in May. Joblessness is more acute in urban areas (9.78%) as workers are leaving big cities amid localized lockdowns for their hometowns and villages. In rural areas it is 7.13%.

Vyas fears that while unemployment will remain high, the labor force participation rate may also fall. He said, however, the current situation is not as severe as last year when the government imposed a countrywide lockdown on March 25 and the unemployment rate zoomed to 24%.

People queue to be vaccinated at BLK-Max hospital in New Delhi on May 4. Photo: Prakash Singh/AFP

This time the federal government is not keen on imposing such a widespread lockdown, considering the economic cost, and has advised states to assess the situation and impose localized lockdowns only as a last resort.

Some of the major cities such as New Delhi, Mumbai and Bangalore are already facing curbs on the movement of people and the functioning of shops and businesses as their state governments impose local lockdowns.

This rise in unemployment is expected to upset projections by many brokerages of a double-digit economic rebound in 2021. Many are now revisiting their forecasts and the latest to do so is Barclays Bank. It has lowered the forecast by one percentage point to 10%. It also expressed concern over India’s slowing vaccination program.

Vaccine drive

The government rolled out the program on January 16. It first covered the healthcare and frontline workers dealing with the pandemic and then targeted those above 60 years. From April 1 it began providing jabs to those above 45 years and from May 1 it has opened them for those above 18 years. With the opening up of vaccination for a larger section of people, the country is now facing a shortage.

People wait to refill their oxygen cylinders for Covid patients in home quarantine at a private refill center in New Delhi. Photo: Prakash Singh/AFP

India needs to cover a population of 900 million and as each person needs two doses of the vaccine for full immunity, it needs 1.8 billion doses. But the current monthly production of the two Indian vaccine manufacturers, Serum Institute of India and Bharat Biotech, is only 110 million doses a month. The government is now looking to ramp up vaccine availability by allowing some foreign firms to sell vaccines in the country.