COVID-19 and Sectoral Employment in India: Impact and Implications

The spread of COVID-19, an unprecedented health shock to the world in 2020-21, led to an economic shock globally. To contain its spread, the majority of the countries introduced containment measures such as lockdowns, social distancing and quarantines. It resulted in the shutting down of many industrial establishments, a reduction in economic activities and restrictions on people's movement. The contraction in gross domestic product (GDP) and trade flow resulted in a reduction in employment and income. The recovery of output and employment varied across sectors and countries. The present endeavour aimed to understand the impact of COVID-19 on sectoral employment in India using secondary data primarily from the Ministry of Statistics and Programme Implementation (MoSPI), the Government of India and the Centre for Monitoring Indian Economy (CMIE) Economic Outlook. Our findings indicate that the impact of COVID-19 varies across regions, occupations and sectors. It affected employment differently across occupations in rural and urban areas. Among sectors, manufacturing, and real estate and construction, services were affected very badly. The rate of recovery was comparatively low in manufacturing, real estate and construction. All sectors indicate a V-shaped recovery for employment and output except the manufacturing sector indicating an L-shaped recovery for employment while a V-shaped recovery for output. In general, employment elasticities have declined across sectors, except for the agriculture sector, in the post-pandemic period. Given the reduction in the employment elasticities across sectors after the pandemic, it may be suggested to focus on new entrepreneurial activities, particularly in the labour-intensive sectors, and skill development programmes for enhancing employment opportunities in the country.