Giving Compass' Take:

• Maurice Kugler and Shakti Sinha analyze how well India's COVID-19 response policies address migrant and agricultural workers.

• How can we make sure marginalized workers and families around the world don't fall through the cracks of COVID recovery? What are you doing to support the well-being of migrant workers throughout the pandemic?

• Learn more about funds to support a equity in India's COVID-19 response policies.

With most of the economy shut down, the fragility of India’s labor market was patent. It is estimated that in the first wave, almost 10 million people returned to their villages, half a million of them walking or bicycling. After the economic stoppage, the International Labor Organization has projected that 400 million people in India risk falling into poverty.

Agriculture is the largest employer, at 42 percent of the workforce, but produces just 18 percent of GDP. Over 86 percent of all agricultural holdings have inefficient scale. Suppressed incomes due to low agricultural productivity prompt rural-urban migration.

Most informal workers labor for micro, small, and medium-sized enterprises that emerged as intermediate inputs and services suppliers to the modern sector. However, workers struggle to get paid, which the government identifies as great challenge. Although over half of India has smartphone access, few can telework. Retail and manufacturing jobs require physical presence involving direct client interaction.

The government’s crisis response has mitigated damage, with a fiscal stimulus of 20 trillion rupees, almost 10 percent of GDP. Also, the Reserve Bank of India enacted decisive expansionary monetary policy. Yet, banks accessed only 520 billion rupees out of the emergency guaranteed credit window of 3 trillion rupees. In fact, corporate credit in June is lower than June last year by a wide margin after bank lending’s fall. Recovery through investment and consumption has stalled. These trends are exacerbated due to the pandemic.

We identified labor market pressures toward increased poverty. India needs to ramp up MNREGA, introduce a guaranteed urban employment scheme, and boost further cash transfers to poor households. Government efforts have been enormous in macroeconomic policy to mitigate adversity, but fiscal space is narrowing, requiring the World Bank and other international financial institutions to step up and help avert even greater hardship.

Read the full article about India's COVID-19 response policies by Maurice Kugler and Shakti Sinha at Brookings.