 Hello and let's talk about the urban economy. The COVID-19-related lockdown has caused a major wave of reverse migration with hundreds of thousands, if not more, heading to the hometowns. The government for the large part does not really address these issues, except for of course standing by a state government's have mounted an assault on labour laws. Now this raises quite a few questions about what is likely to happen in the next couple of months, a time when many pro-government experts say that there will be a revival. Will urban unemployment rates come down? Or any kind of steps being planned to address this situation? We talk to journalists on Indio Chakravarthy to find out. Thank you so much for joining us. So today we are going to be talking about largely the urban economy as the lockdown, if you can call this a lockdown, progresses. So we have been talking about this for the past couple of weeks, we have seen the impact of the migration, we have seen a huge number of people of course going back to their hometowns and one of the key issues is what kind of, of course the government has been working under the assumption that this is a temporary thing, if we will come back and things will be hunky-dory again. But I, it doesn't look like that maybe the situation. So how do you see this, what kind of say, for lack of better word, trickle down effect might this have on the urban economy itself? So you know, the prime minister recently said that most businesses are back in action, the lockdown is more or less over and much of it is back in operation in urban India and I actually messaged a friend of mine who runs a couple of restaurants in Delhi and I asked, well, maybe restaurants is not the best people to ask, but I did ask her that what do you think of this, is that, is this true? And she was not very happy with the prime minister statement, if I could put it mildly. She said that, you know, this is absolutely news to me, I wonder who is doing well. I also have another friend who supplies furniture parts and stuff like that. His business has not recovered, nothing is happening in that. There's another friend who is a carpet supplier, they're completely dead, there's nothing happening there either. So all of the urban operations, I don't know what the prime minister is talking about, where it's come back, I don't know, because even if you look at CMI data, unemployment in urban India, the overall unemployment rate has peaked at about 30%, according to Mahesh Vaas's article, and that has dropped to 13%, but it's largely driven by the fact that unemployment in rural India has dropped much faster. And we know that about 70% of workers in India are actually in rural India. So given that if unemployment there drops faster, you'll see that the 13% number actually hides a pretty high unemployment rate that continues in urban India. Unemployment rate in urban India continues to be 50% more than what it was in before the lockdown, and already it was pretty bad, it wasn't as if it was fantastic in March. We knew that things were doing badly. So the question is, what is the government doing about it? I think that the government currently has no plan for it, because the government's economic solutions are all band-aid solutions for Shah. So one of the key questions, one of the key arguments for the government is that people are going to come back, and it's inevitable, people need jobs, so they're going to come back. Do you see that really happening in the way the government is predicting? I think the government is anticipating that people won't come back, because you look at it. The Prime Minister is going to announce a new series of schemes called the Pradhan Mantri. I think it's called the Pradhan Mantri, Garib, Kalyan, Rosgarh Yojana, and these are all actually already there in the budget, they're all going to be clubbed together and front-loaded. 50,000 crore rupees is being given for that, out of which most of the money is already budgeted for, and it includes the 40,000 crore odd which the government has announced as additional for Mandrega. Now, look at what has happened in Mandrega. Mandrega demand has gone up sharply. We know that in April, obviously it wasn't because there was a complete lockdown. So in April, demand fell sharply. Demand fell from about last year in 2019 in April, about 2.1 crore odd households asked for jobs under Mandrega and only about 1.7 crore got jobs. So you could see that about 20% of those who had demanded jobs in April 2019 didn't get households. The comparable data is available for households because when you go to look for people with jobs, you get person days and not people, which is understandable because the same people get work across months. In April 2020, remember 2.1 crore people demanded jobs, households demanded jobs in April 2019 that dropped to 1.3 crore households demanding jobs in April 2020. That's all because of the lockdown because we know that no one left the villages. People were living urban India to go to the villages, so they should have asked for more jobs. But it dropped and the number of jobs that were provided, that could be provided by state governments, fell from 1.7 crore down to about 1.1 crore. But the strike rate in a sense, we know that about only 80% of the people could be provided jobs last April. This April, about the number of people who couldn't be provided jobs fell to about 86% were provided jobs. So those who couldn't be provided jobs fell from 20% to about 14%. Look at Maynau. Now this is significant. Last year, about 2.5 crore households asked for work and about 2.12 crore, 2.12 crore households got work. So we know that about 37 lakh households did not get work last year in May. This year, 33 lakh households did not get work. But that is compared to a massive increase in demand, 3.6 crore households. Instead of 2.5 crore, 3.6 crore households, as in 1.1 crore extra households have asked for work in May. So you can see that part of it was because of the impact of lockdown and also because the loss of opportunity of various kinds of work. So people who would otherwise have been working in non-agriculture operations, getting some kind of income from that, they lost that income and they had to go to Mandrega to look for jobs even when not that many people had gone. We all know that it's only by the end of May or early June that about 1 crore people went. How many jobs were given? About 3.28 crore jobs were given. Work was given in terms of number of households who got benefit from Mandrega. So that's a huge increase. That's a 55% increase compared to last May, entirely driven by demand, entirely driven by the fact that state governments were in a bind. They had to give some work. Otherwise, there would have been a huge problem. If I add April and May, demand went up by 6%. That is despite a sharp fall in demand in April. And the jobs provided went up by nearly 15%. So April may have about 56 lakh more households got work under Mandrega. And that is set to increase. So in effect, if you look at it, partly rural jobs gone that was absorbed under Mandrega, which is why we saw that rural unemployment has actually dropped faster. And now the rural workforce is going to increase, mind you Prashant. Because if you look at the number of people who have work in rural India, that's about 28 crore. That's going to go up to 29 crore. So that work has to be provided and that is what the government is trying to do. It says it will provide about 67 to 68 lakh new jobs or work in rural India for the 1 crore people. So they're betting that a lot of people will not come back out of here. A lot of people would probably say that, yahi marna chai, na khake marna chai, then go and work. Because they did get caught here and they were in dire straits. Many people were and we know a lot of them died on their way. So I don't think that the government can be that sure that people will come back. And that's a problem. Then I don't think the government has any answer for that. Right. And in some ways probably that's part of their calculation is well considering. Like you mentioned earlier, the Bihar elections are also coming up. Absolutely. You remember that there were these stories we heard from Bihar where people, migrant workers would reach their home, said that, why should we vote for Nithish Kumar if he cannot provide us jobs here? We want jobs here. So in a certain sense, that's part of the calculation because Bihar has been mentioned. Of course, UP has been mentioned. UP is still a couple of years away. So there's still time for UP, but Bihar is almost immediately now. So that is one thing. And they've virtually started campaigning there. This is part of that campaign. This part of giving those jobs or at least promising those jobs. And we know that that is why, under the guise of providing jobs under COVID to bring us out of coronavirus related economic slowdown, expenditure is being front loaded. Because otherwise, the election commission can ask a question. Why are you front loading so much expenditure before the election? So it's a good way to do it. Right. So in practical terms, what happens when a substantial chunk of, say, your calculation right now is about one crore, people have left the urban centers. So in practical terms, what happens to the urban economy and who gets affected? You know what, the people who get affected. Now, interestingly, some estimates suggest that 4 crore migrant workers work in various parts of India. But many of them are probably also in rural India. We know that in Punjab, in Haryana, there are people who were laborers in agriculture, in villages, are also from Eastern India, from Bihar, some from Bengal. So given that, let's assume that at least 3 crore are in urban centers. So 1 crore, and out of that, if we say 75% went from urban centers and not from villages, then we would say that there's a sharp drop in the availability of workers in urban India. Now, that means that when you go out, and we know how construction takes place, right, there's a builder who comes, and there's no fixed contract. They have a labor contractor, and the labor contractor goes every day to the local labor Monday, picks up one mason, says the team didn't come home. Basin lagana, yeh ka nal ka lagana hai. Yeh pe tile lagana hai. Tiling ka kaam, team didn't. So this is how they arrange it, and these are builders arrange their work. Now, when you don't have that person sitting out there, then that work is going to get affected. When that work gets affected, what happens to the rest of the people, people like us, I don't know, I mean, if I were an entrepreneur and I have to pay more for the blue collar worker, then I will have to cut money from the white collar worker. So in some senses, there is a leveling that's happening, but that leveling is happening without any productive process being set into motion. It's not as if, you see, what is the amount of money you're going to get under Mandrega? 150 days of work and 20 rupees extra. So you're going on, what, 3000 rupees extra in the year? 150 rupees, days of work at 200 rupees per day on an average. You'll end up with 30,000 rupees. That's 2,500 rupees household income for the rural poor. On top of that, most people who would work in Mandrega probably earn not more than 1,000, 1,200 from agricultural operations and non-agricultural operations per month. So the income that you're insuring is about 4,000. Now, many have marginal farmers with small plots of land. They get another 6,500 rupees from PM Kisan. There are some other schemes here and there. I'm sure the government will increase, extend the free ration for some time. So if you look at it, it's essentially, which we have discussed several times, it's essentially ensuring subsistence level existence for about 6 to 7 crore people out of the workforce. And that is 15% of India's workforce. So if you look at it, 6 crore and multiply that by 5, so that's 30 crore odd out of 130 crore. So people, and most of them in rural India, so if you look at it, Prashant, essentially what we are seeing is a largely unprotective, band-aid solution to keep people at the subsistence level, people who will see you as your benefactor because ultimately all schemes come with the name Pradhan Mantri and they have nice posters of the PM out there. So it's the most cost-effective way to get vote. But what happens to the rest of the economy, there is no plan. That's what I've been saying for some time, absolutely no plan. Thank you so much for speaking to us. Thank you Prashant. That's all we have time for today and let's talk. We'll be back on Monday with major news developments from the country. Until then, keep watching NewsClick.