The rapid spread of the coronavirus pandemic and the subsequent lockdowns by governments all over have huge impact that will remain for sometime now.
The pandemic has forced countries to stop their production and supply chain and thus many people are rendered jobless and are struggling to get their ends meet. As in the USA which has been turned into one of the epicentres of the pandemic has witnessed around 3.8 crore Americans filed for jobless benefits few days back and has also seen unemployment numbers reaching to 3 crore. India is no exception and now the impact of this pandemic is clearly visible in various forms.
Centre for Monitoring Indian Economy (CMIE) shows an increase in last week of March and the first week of April. Coupled with a rise in unemployment rate and the labour force participation rate has fallen. On the other side more than 15 million jobs could be lost in India’s export sector due to half of all orders getting cancelled and unites unable to pay loan as said by the apex body of the exporters on Friday.
People working in various sectors are losing jobs and are taking pay cuts thus it is becoming difficult to get their ends meet. Look at the numbers here as around 8.2 lakhs members of retirement fund body Employees Provident Fund Organization (EPFO) and private PF trusts have dipped into their savings and withdrew Rs 3243.17 crore to sustain in the lockdown imposed by the government to contain the COVID-19.
Earlier, last month on March 28, the EPFO had allowed formal sector workers under its ambit to withdraw a non refundable advance from their retirement savings to deal with hardships due to lockdown. And as many as 35000 people are withdrawing their provident fund savings on an average working day in April. Around 2700 crore has been withdrawn under the newly facilitated pandemic rules.
The reason behind these withdrawals is no hidden. During this ongoing lockdown people don’t have money to afford even basic things thus they are resorting to withdrawal from EPFO and PF. And if the lockdown will be the only weapon in government arsenal then it will lead to cascading impact on the individual investments as well.