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Effects of COVID-19 Pandemic on the Rural Non-farm Self-employed in India
This paper examines the importance of skills, especially through vocational training, for the rural non-farm sector in overcoming the disruptions caused by the COVID-19 pandemic. The difference-in-differences technique has been used to assess the differential impact of the COVID-19 pandemic on the earnings of skilled and unskilled self-employed activities. The primary data have been collected from 880 rural non-farm self-employed individuals who hailed from different regions of Karnataka. Although every section of the rural non-farm activities has been adversely affected due to the pandemic, the impact is more severe on unskilled individuals as compared to skilled individuals. Therefore, policymakers need to pay attention to enhancing the provision of formal vocational training for RNFS individuals on a grander scale.
The present paper has been developed as a part of a major research project titled “Role of Skill Development for Promotion of Rural Non-farm Self-employment in India,” funded by the Indian Council of Social Science Research (ICSSR) and the Ministry of Human Resource Development (MHRD). Financial support to the above project by ICSSR and MHRD (IMPRESS Scheme) is gratefully acknowledged by the author.
The COVID-19 pandemic, since its outbreak in March 2020, has unleashed massive demand- and supply-side shocks across different economies the world over. In view of measures like travel restrictions and quarantine procedures, the availability and productivity of labour substantially plummeted during the lockdown period and thereafter. This, in turn, led to a widespread increase in unemployment at unprecedented rates. India has been one of the most affected nations going by the scale and period of intense restrictions placed on the population. However, the employment crisis in India started much before the spread of the COVID-19 pandemic. A substantial slowdown observed in the employment generation during the last one and a half decades has come to dominate the discourse focused on the current Indian economic scenario across polity and academia. Even an employment downturn has been observed, despite the economy witnessing nearly a 10% growth in the gross domestic product in the latter half of the last decade. Since output growth could not ensure employment growth, the economy has moved from a situation of job-less growth to job-loss growth (Kannan and Raveendran 2019).
No doubt, the COVID-19 pandemic has further accentuated the existing employment crisis relentlessly. Not only has it increased the unemployment rate, but it also has reduced work intensity and earnings substantially of those continuing work (ActionAid Association [India] 2020). This has been particularly hurtful considering the significant share of informal workers in the total workforce in India (that is, about 93%, including informal sector workers and informal workers in the formal sector) who continue to remain unprotected, to a large extent, by proper social security measures. Moreover, according to the Periodic Labour Force Survey (PLFS) for 2017–18, about 52% of the workforce are classified as self-employed in India (PLFS 2019). In fact, a majority of them are own-account workers or unpaid family members, the most vulnerable section among the informal workers.
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