The COVID-19 pandemic produced one of the largest contemporaneous labour-market shocks in modern Indian history. This paper investigates whether the pandemic generated a ratchet effect in the Indian labour market — an asymmetric adjustment where employment and earnings for vulnerable worker groups fell quickly but recovered slowly or not fully, producing persistent scarring. Drawing on national surveys (PLFS), panel evidence and targeted studies of migrants and informal workers, I develop a conceptual model linking downward nominal wage rigidity, firm exit, skill erosion, and distress migration to ratcheting. I test two hypotheses using published retention and employment statistics and propose an empirical framework (difference-indifferences and survival analysis on firm and worker cohorts) for verification. Key findings from existing evidence indicate large immediate job losses in the informal sector and among migrants, only partial re-absorption of workers into pre-pandemic jobs, and persistent decline in earnings and labour-force participation for certain groups — consistent with a ratchet effect. Policy implications stress active labour market programmes, social protection extension, and targeted support to small firms to reduce scarring
Maheshwari et al. (Sun,) studied this question.