As per CMIE, over 18.9 million people have lost their jobs in the last six months.
New Delhi: The temporary respite provided by the Reserve Bank of India (RBI) in terms of moratorium on EMIs against term loan is coming to an end on 31 August and this, coupled with the soaring unemployment rate across the country, is causing tremendous pressure on small traders, businessmen and those in the salaried class who have lost their jobs in this pandemic.
Rahul Das, who worked at a multinational company in Gurgaon, has recently been laid off by his employer who cited the economic slowdown caused by Covid-19 as the reason.
Das told The Sunday Guardian that in the first week of July, he was asked to resign by the HR department of his company within 24 hours, since the company was “re-arranging costs”. “The company where I had been working for the last three years, took just a five-minute call and a 24 hours’ notice to ask me to leave. I had recently bought a new home against a loan and I have no clue how I am going to repay that loan for the next few months since I will have no salary. The moratorium also comes to an end this month.”
Sivesh, a budding lawyer in his early 20s who was working at a law firm in Mumbai, was also asked to leave in July by his employer since his law firm was “restructuring” their work force and had no work during the period of the lockdown.
Sivesh said he has a loan which he was paying in small installments, but with the job gone and the moratorium coming to an end, he is finding it difficult to even sustain himself in a city like Mumbai, leave alone pay installments.
Sivesh told this correspondent, “I was just asked to resign without giving any reason. They just said that the company is cutting down costs. Our salary was already reduced during the period of lockdown since there was hardly any work. But now with no job and having to pay credit card bills and personal loan amounts, I am really worried about how I am going to do it. I desperately need a job. I don’t come from a very wealthy family.”
There are thousands of people like Rahul Das and Sivesh across the country who have lost their jobs during the last few months and there are lakhs of people whose salaries have been cut by their employers owing to the Covid-19 pandemic.
According to the CMIE (a private think tank on economic affairs) data released recently, more than 18.9 million people belonging to the salaried class and the organised sector have lost their jobs in the last six months. In July alone, more than 5 million jobs were lost and a CMIE report says, “the plight of salaried employees has worsened since the lockdown has begun”.
The rate of unemployment has also been growing significantly in the organised sector. The CMIE report says that the current unemployment rate in the country stands at around 9%.
Apprehending the economic situation across the country, the Government of India and the RBI had announced a moratorium on all loans and credit card payments for a period of three months starting from March, when the pandemic had hit the country. The loan moratorium was further extended for a period of three more months in May this year, and for which the time period is coming to an end on 31 August.
The RBI is unlikely to extend any further deadline for the loan moratorium as banks and other lending institutions have expressed their concern about a cash crunch to the RBI.
According to a leading lending agency Finway’s data, more than 46% of the total borrowers had requested for a moratorium on their EMIs and most of these requests had come from the salaried class.
With job losses and salary cuts hitting the salaried class the hardest at this time, what most people who have lost their jobs or have got a salary cut want is a further extension of the period of moratorium as it has become a question of their survival.
A senior multinational company employee has had to take a 40% salary cut and has a huge home loan over his head. He told The Sunday Guardian, “I would like to make one request to the government and any decision-making authority to please consider the salary cut and joblessness of the middle-class people. We buy homes with our very hard-earned money and we do not want to face the wrath of the banks because of no fault of ours. I have a home loan and two little children; where would I go if I am unable to pay two EMIs? My salary has been cut almost to half, and God knows when the situation will normalise. The government should help us, the honest taxpayers.”
According to sources, the RBI is considering some sort of a relief to be extended to people who have lost their jobs during the pandemic period and were regularly paying their EMIs till 1 March 2020. But the RBI is unlikely to consider any relief for people who have had to take a salary cut during the pandemic period.