New Delhi, (Asian independent) Andhra Pradesh, West Bengal and Tamil Nadu have a higher share of informal workforce which is vulnerable to job losses due to the Covid-19 pandemic and the ensuing lockdown restrictions, according to a Crisil report.
There were – as per Lockdown 3.0 – eight states in which the share of districts classified under the red zone was higher than the national average. These states account for 60 per cent of India’s GDP and 58 per cent of workforce.
Of these, Maharashtra, Tamil Nadu and Gujarat, being most dependent on output from industry and services, are more vulnerable to output losses as they face restrictions, the report said.
Andhra Pradesh, Rajasthan and Uttar Pradesh are fiscally more vulnerable due to relatively higher debt ratios. These states also have high dependence on revenue sources from petroleum, liquor and stamp duty.
Andhra Pradesh, West Bengal and Tamil Nadu have higher share of informal workforce, which is vulnerable to job losses.
Crisil has analysed as to what does one more lockdown mean for the economies of states.
With states continuing to see a rise in cases, the restrictions have been extended. This is bound to slam the overall economy harder.
The top eight pandemic-hit states contributed to 65.5 per cent of manufacturing output, 60 per cent of construction output and 53 per cent of services.
The report said that 24 per cent of these states’ workforce is regular salaried. Of which, 43 per cent are without a valid job contract – higher than national average of 38 per cent, 26 per cent of these states’ workforce is employed as casual labour and 50 per cent is classified as self-employed.
The report notes that Maharashtra, Tamil Nadu, Gujarat and Telangana – relatively more industrialised and service dependent – may face output shocks with extended restrictions on economic activity.
Rajasthan and Andhra Pradesh have high dependency on revenue sources hit by lockdown. Further, their fiscal capacity to push growth is limited due to higher outstanding debt.
On the other hand, a higher proportion of informal workforce in Andhra Pradesh, West Bengal, Tamil Nadu, Rajasthan – make them susceptible to job losses.
Among the relatively less-hit states, restrictions on economic activity could hurt Karnataka and Kerala – where share of industry and services is higher, while in others like Madhya Pradesh, Punjab and Bihar, a higher share of agriculture could cushion the economy this year.
The states are most dependent on fuel and liquor taxes, and realty duty are at peril, as per the report.
States are heavily dependent on petroleum, liquor and stamp duty for their own tax revenue. With the lockdown, revenues from these sources have dried up.
The taxes on petroleum, stamp duties and registration are dependent on economic activity and usually tend to dip during slowdowns.
But the fall in excise from liquor – a relative inelastic source of revenue accounting for 10 per cent of the own tax revenue of states – will diminish states’ coffers. This could otherwise have helped during a downturn.
Higher the share of informal workforce, the bigger is the job-loss risk, as per the report.
Among the most pandemic-hit states – West Bengal, Andhra Pradesh, Tamil Nadu – have higher proportion of casual labour workforce. Among the ones facing the brunt of restrictions (but with low Covid-19 cases), Bihar, Kerala, Karnataka, and Odisha need to worry the most, the report said.
