Poverty & Inequality

Lockdown, life, and livelihood in the times of Corona

  • Blog Post Date 07 April, 2020
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Arjun Kumar

Impact and Policy Research Institute

arjunkumarresearch@gmail.com

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Balwant Singh Mehta

Insitute of Human Development Delhi

balmehtalko@gmail.com

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Simi Mehta

Impact and Policy Research Institute

simi@impriindia.org

After around 36 hours of the lockdown to prevent the spread of Covid-19 in India, the Finance Minister announced a slew of welfare measures amounting to Rs. 1.7 trillion to support the vulnerable population. Kumar, Mehta, and Mehta argue that while the total amount sounds enormous, the per-person benefit is inadequate. Large proportions of the masses have been left out in the current relief and monetary aid package.

 

The worldwide spread of the novel Coronavirus disease (Covid-19) is severely impacting the global economy, and as per recent updates almost one-third to one-half of the global population is now under some form of a lockdown. This has threatened an ‘economic bloodbath’, where practically all economic activities around the world are witnessing a closure. According to the International Labour Organization (ILO), nearly 25 million jobs could be lost worldwide due to the pandemic, which would mean income losses for workers between US$ 860 billion and US$ 3.4 trillion by the end of 2020. This will translate into a fall in the consumption of goods and services, which will have a strong negative effect on businesses and, in turn, on the national economies. Among other continents, Asia would witness disruptions in backward and forward linkages in supply chains. Key providers of employment, such as manufacturing, tourism and hospitality, travel, services and retail industries, along with small and medium enterprises, have already begun to bear the acute brunt of Covid-19.

Choosing between human and economic health

Though India’s number of reported Coronavirus infections remains relatively low (around 3,981 active cases, as on 7 April 2020) vis-à-vis other countries, it is feared that the pace of spread of the virus in India – similar to that of China, Europe, or the United States – would have sweeping disastrous consequences more than anywhere else. The reason for this is not just the sheer magnitude of India’s population of over 1.3 billion, but also its inept and crippling health systems and basic infrastructure, and inadequate and untrained human resources leading to poor delivery of services. Officially Covid-19 has not transcended into its third stage of community transmission in India, and is still in the local transmission stage. Yet, the real situation could be grim as not enough tests (only around 40,000) have been done, as reported by the Indian Council of Medical Research (ICMR). As India was preparing itself through preventive actions to stop the further spread of the virus, the Prime Minister (PM) announced nationwide lockdown – comprising every state, Union Territory, district, village, and street – for 21 days starting 00:00 hours on 25 March, and enforced the Disaster Management Act, 2005.

The irony of the situation is that while there is an acknowledgement of the need for social distancing and self-isolation and the preeminence of human lives and well-being, there are growing concerns over the severity of the economic and social impact that the lockdown would have on the country. This would be especially embossed considering the already prevailing economic slowdown. Economists like Kaushik Basu and Arun Kumar have echoed apprehensions that failure to provide essential goods and services to the bottom 50% of the population could bring India to the brink of mass sufferings and social revolts.

Cities as engines of growth have come to a grinding halt. The reason for this is that the ‘city-makers’ like the daily-wage migrant (seasonal and circular) labourers (estimated at over 50 million), street vendors, auto or rickshaw drivers, and construction and utility workers are finding it onerous to survive amid no work and lack of social protection and rights. Similar is the plight of small businesses as well as freelancers and those operating in the gig economy, who have begun to bear the brunt of the national lockdown. On the other hand, big businesses and regular salaried citizens, though bearing the cost of social distancing, can navigate the rough waters and survive.

Livelihood in a lockdown

Before delving into the lurching livelihood situation in India, it is important to highlight some major trends in the national-level employment. As per the recent Periodic Labour Force Survey (PLFS), 2017-18, around 0.45 billion (47%) adults are working in the country. Over half (52%) of the workers are self-employed followed by casual workers (25%) and the remaining are regular or salaried (23%). Of these, the casual workers are the most vulnerable due to the irregular nature of their work and daily-wage payment based on their work schedules. The status of other workers also does not provide a great sight, as most of the self-employed (96%) were either own-account workers or unpaid family worker (sole workers), with only 4% constituting employers or entrepreneurs.

On the other hand, over 70% of the regular or salaried workers have no written contract, 72% are engaged in the private sector, nearly half (46%) are not eligible for paid leaves, and 45% are not entitled to any social-security benefits including healthcare.

Sector-wise employment in the non-agriculture sector given in Table 1 and Table 2 reveals the magnitude and extent of vulnerability of the workers in the country.

Table 1. Share of casual/informal/self-employment by different sectors for 2017-18 (usual status and all age; in %)

Sector

Self-employed

Casual

Regular formal

Informal

Total

Construction

10.8

83.7

1.5

3.9

11.7

Trade

70.6

3.9

3.7

21.8

10.1

Transport

45.5

12.7

10.0

31.9

4.8

Hotel and restaurant

58.1

9.8

4.6

27.5

1.9

Total

52.2

24.9

9.6

13.2

100.0

Note: Informal employment refers to paid work without any social protection; and Total refers to the percentage share of the sector in total employment.

Source: PLFS, 2017-18.

Table 2. Number of workers (in millions) of casual/informal/self-employed by different sectors for 2017-18 (usual status and all age)

Sector

Self-employed

Casual

Regular formal

Informal

Total

Construction

5.8

45.4

0.8

2.1

54.2

Trade

33.1

1.8

1.8

10.2

46.9

Transport

10.1

2.8

2.2

7.1

22.3

Hotel and restaurant

5.1

0.9

0.4

2.4

8.7

Total

242.7

115.9

44.6

61.5

464.8

Source: PLFS, 2017-18.

Thus, in the context of the prevailing pandemic and lockdown, the jobs and earnings of an estimated 0.20 billion workers, including casual workers, regular or salaried workers without any job security, and sole self-employed (own account or unpaid family), are at stake. This figure will only increase if another 0.03 billion people who engaged in begging, prostitution, etc. are included.

Interventions at the government level

The absence of market activity will directly and adversely impact these vulnerable people and their families. The union and state governments have made appeals to the private sector to not lay off workers or cut their salaries during this time of crisis. Financial relief packages have also been announced by the states. For instance, Uttar Pradesh has announced a financial package of over Rs. 3.53 billion to give cash handouts to an estimated 3.53 million daily wage earners and labourers. Moreover, an amount of Rs. 1,000 each will be given to 1.5 million daily wage labourers and 2.03 million construction workers across the state through direct benefit transfer (DBT). That means, the beneficiaries including rickshaw pullers, hawkers, and kiosk owners, will get the money directly into their bank accounts. Punjab government has declared an immediate relief of Rs. 3,000 to each registered construction worker in the state. A total sum of Rs. 0.96 billion has been earmarked for this purpose. The Delhi government also announced payment of up to Rs. 5,000 as pension to the 850,000 poor beneficiaries and free ration to those entitled to food subsides under the Public Distribution System (PDS).

While promulgating the orders for a ‘janata curfew’ 1 to be observed on 22 March 2020, the PM in his address to the nation on 19 March announced that a Covid-19 Economic Response Task Force, chaired by Finance Minister (FM) had been set up to combat the impact of coronavirus on the Indian economy. Interestingly, the FM seemed unaware of this during her press conference on 24 March to announce several taxation relief measures. Most of these measures related to the deferring of payments of direct taxes and GST (goods and services tax) for three months, and interest rate subvention/other relaxation on such payments. In other words, the filing requirements of these taxes has been postponed to July 2020. On the same day, the PM announced a ‘total lockdown’ of the country starting at 00:00 hours of 25 March.

After around 36 hours of the lockdown into effect, on 26 March, the FM announced a slew of welfare measures under Pradhan Mantri Garib Kalyan Yojana (PMGKY) relief package, amounting to Rs. 1.7 trillion (US$ 22 billion) to cover 0.8 billion poor people or two-thirds of India’s population. At least this announcement reveals the number of the ‘poor’ in the country, which the government acknowledges require support2.

Intended to reach out to the poorest of the poor – with food, gas, and money in hand so that they do not face difficulties in buying essential supplies – the major highlights of the PMGKY package are, along with the provisionary status of the components and its budgetary estimates:

  1. Special insurance scheme providing Rs. 5 million cover for health workers3 fighting Covid-19 in government hospitals, wellness and healthcare centres. Under this new scheme, approximately 2.2 million health workers would be provided insurance cover to fight this pandemic. Estimated budget for this is Rs. 150 billion (2.2 million workers; Rs. 5 million insurance cover)4.
  2. PM Garib Kalyan Ann Yojana: An additional 5 kg of rice/wheat will be given to 0.8 billion poor people, along with 1kg pulses per household according to regional preferences, for a period of three months, free of cost. Estimated budget for this new scheme is Rs. 450 billion.5
  3. Under the existing PM Kisan Samman Nidhi (PM-KISAN) scheme, an instalment of Rs. 2,000 will be transferred to the bank accounts of 87 million farmers in the first week of April. Estimated budget for this is Rs. 174 billion (87 million beneficiaries at Rs. 2,000 each).
  4. PMGKY components:

    a) 200 million Jan Dhan6 women account-holders will be covered under the relief package and an ex-gratia cash transfer of Rs. 500 per month will be given for the next three months. Estimated budget is Rs. 306 billion (204 million beneficiaries at Rs. 1,500 each).

    b) Eighty million poor families will get free cylinders for three months under the Ujjawala7 . 

    c) To prevent any disruptions in the employment of those who earn less than Rs. 15,000 per month, the government will bear the cost of Provident Fund (PF) contribution of both employer and employee (24%) for the next three months. However, this is only for those businesses that have up to 100 employees.

    d) Thirty million senior citizens (above 60 years), widows, and Divyang (persons with disability) will get one-time additional amount of Rs. 1,000 in two instalments, will be given through DBT over a period of three months. Estimated budget for this is Rs. 30 billion (30 million beneficiaries at Rs. 1,000 each).

  5. With effect from 1 April 2020, the wages under MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act)8 have been increased by Rs. 20 per day or Rs. 2,000 annually per worker on average, as additional income to help daily-wage labourers. Estimated budget for this is Rs. 100 billion9 (Rs. 20 wage increase for 100 man-days; 50 million workers at Rs. 2000 each).
  6. Collateral-free loans for the 6.3 million women organised through self-help groups have been doubled from Rs. 1 million to Rs. 2 million under the Aajeevika Deen Dayal Antyodaya Yojana or National Rural Livelihood Mission.
  7. Other components:

    a) Employees’ Provident Fund (EPF) Regulations will be amended to include pandemic as the reason to allow non-refundable advance of 75% of the amount or three months of the wages, whichever is lower, from the accounts of 40 million workers registered under EPF.

    b) State governments have been directed to utilise the welfare fund for 35 million building and other constructions workers created under the Building and other Construction Workers’ Act, 1996 to protect them against economic disruptions.

    c) The state governments will be asked to utilise the funds available under District Mineral Fund (DMF) for supplementing and augmenting facilities of medical testing, screening, and other requirements to preventing the spread of Covid-19 and for the treatment of patients affected by this pandemic.

Our analysis of the provisions and budgetary estimates of the PMGKY package interventions suggests that the overall relief package for the poor is not more than Rs. 1.2 trillion (on a higher side) as against the announced Rs. 1.7 trillion.

Table 3 below shows the actual number (as per the government statistics) of claimants across the above categories of PMGKY. It also provides information on beneficiaries that have been left out of its purview.

Table 3. Key statistics of claimants across PMGKY categories from official sources (most recent available)

 

Number in million

Voter IDs

900

Aadhaar Cards

1,250

PAN 10 card (linked with Aadhaar)
(176 million yet to be linked)

308

GST registrations (GST Network (GSTN))

12

Companies (active) (MCA11)

1.2

MSMEs (micro, small & medium enterprises) (with Udyog Aadhaar)
Micro
Small
Medium

7
6
0.72
0.02

Start-ups (DPIIT12)

0.03

NGOs (registered with NITI Aayog NGO Darpan)

0.09

Factories/industries (ASI13, 2017-18)

0.24

Establishments operational (Economic Census, 2013)

58.5

Ration Cards under NFSA14 (90% linked with Aadhaar)

234

Jan Dhan accounts – PMJDY15

382

MUDRA16 loan accounts (active)

58

PM-KISAN beneficiaries (active) (total estimated 150 million)

93

MNREGA (active workers)

128

EPFO accounts (Aadhaar-seeded)

73.8

Employment exchange job seekers

43

Building and other constructions workers (registered)

35

PM Shram Yogi Maan-dhan for unorganised sector

4.4

Atal Pension Yojana subscribers

21.2

PM Suraksha Bima Yojana enrolment

178

Ayushman Bharat e-cards issued
(77.6 million PM-JAY17 and 46.8 million state cards)

124.5

Source: https://transformingindia.mygov.in/performance-dashboard/ and official database. Compiled by Authors.

The measures by the FM can be summarised as too little too late; existing schemes have been consolidated and portrayed as providing a major aid for the benefit of the poor. It is difficult to understand the calculation to arrive at the figures Rs. 500 in the Jan Dhan accounts of women and Rs. 333 to pensioners, and what purpose these meagre sums would serve. For instance, even if a family spends Rs. 20 per day to buy half a litre of milk, it comes to spending Rs. 600 a month, leave aside procuring vegetables. Basic nutrition security, therefore, certainly remains out of the consideration of the government in this support package (only rice/wheat, pulses and gas provided). One must not be surprised when India’s rank in the Global Hunger Index slips further down. Given the existing inflation and high costs of essential commodities, this scanty amount appears to be making a mockery of the poor with sheer tokenism.

The innovative approach in Chapter 11 of the Economic Survey 2019-20, ‘Thalinomics: The Economics of a Plate of Food in India’, that attempts to quantify what a common person pays for a Thali (platter) across India, deserves special mention. It estimates that the all-India price of a decent vegetarian and non-vegetarian meal (constructed using the dietary guidelines by National Institute of Nutrition, Hyderabad, for Indians) as little under Rs. 25 and Rs. 40, respectively. Therefore, in the current health emergency, the PMGKY should be expanded to ensure a balanced diet and dignified food assistance is provided to the poor.

As against the steps taken by other major nations in their fight against Covid-19, India’s relief package of around US$ 22 billion seems miniscule and excludes other sections like small and medium enterprises, migrant labourers (circular and seasonal), unorganised sector, pregnant and lactating women and children, and those suffering with critical ailments, etc. This is in continuation of inclusion and exclusion errors in the official database, which was also highlighted in the Economic Survey of 2016-17 that noted that two-fifths of the bottom 40% of the population in the economic ladder was excluded from the PDS in 2016-17. The corresponding figure for 2011-12 for MNREGA was 65%.

The PMGKY is eerily silent on utilising the flagship programmes of the Modi government, such as the National Health Mission, PM-JAY and Ayushman Bharat Yojana and Health and Wellness Centres, various component of National Urban Livelihood Mission, Swachh Bharat Mission, etc., to combat the fallouts. On 27 March 2020, the Reserve Bank of India (RBI) also announced a reduction in the repo rate by 75 basis points and in Cash Reserve Ratio by 100 basis points (3% from earlier 4%), and asked the banks to decide on moratorium on EMIs (equated monthly instalments) for the next three months.

Table 5. Country-wise stimulus plans as a percentage of GDP (gross domestic product)

Analysis and the way forward

The unprecedented consistency of a three-month planning period and coordination of various government stakeholders, the inclusion of Covid-19 tests under Ayushman Bharat Yojana, the capping of the test price at Rs. 4,500 by private hospitals, and the commitment to procure 40,000 ventilators by June 2020 – are welcome moves and provide much-needed respite in these difficult times. However, the focus is on symbolism and a detailed strategy for the execution and delivery of services remains missing: actual figures of payment for each beneficiary; daily/weekly timeline and roadmap for the infusion of these support measures, and their monitoring and implementation; periodically updating about the utilisation of the Rs. 150 billion allocated for the procurement of testing kits and healthcare equipment and adding more funds into that. There is an urgent need to include healthcare under the ‘Emergency Sector Lending’ and executing it on a war footing.

As Raghuram Rajan has rightly suggested, lives of people should be placed before the economy and urgent focus should be on testing, tracing, treating, and controlling the pandemic. For this, the entire budget for FY (fiscal year) 2020-21 can be re-prioritised along with a reorientation of government machinery (its departments and private consultants leading project monitoring units), and optimum utilisation of all resources in the country.

While the total amount announced for the benefit of vulnerable sections appears to be enormous, the per-person benefit comes out to be inadequate. Further, it is evident that the lockdown was put in place without having a well-crafted strategy, including an assured supply of essential commodities, medical care services, kits and equipment, manpower and infrastructure preparedness, and without thinking about what happens to the poor and those who lose their livelihoods during this period and among Covid-19 fears. In the absence of clear-cut guidelines and proper implementation plans, the implementation of all these announcements appears to be allusive. Further, the risk averse and pessimistic approach towards public spending over the last few days exposes the false portrayal of the macroeconomic situation as strong in recent months.

There is no proper national-level registry for the poor and those involved in informal jobs or workers such as vegetable vendors, construction workers, rickshaw pullers, auto-rickshaw drivers, and temporary workers, etc. There is urgent need for these registries to be instituted using latest digital technologies and innovations, along with a dynamic unemployment registry to provide direct economic (universal basic income), health (universal coverage), and other necessary contingency protection and support.

In this time of crisis, the government must speed up the payment of delayed payments to every public and private enterprise. Further, the utility bills of the most vulnerable must also be paid for by the governments. Also, to ensure that each ward (84,420 in 4,378 cities) and each Gram Panchayat (262,734 in 6,975 Blocks and 706 districts) are fully equipped to serve the populace, as per the service-level benchmarking suitable to combat the pandemic, each of them must be provided with emergency funds from the existing schemes like the Swachh Bharat Mission, Jal Jeevan Mission, Smart Cities Mission, Digital India, new skills training, etc. This will facilitate decentralisation, maintain hygiene and sanitation, and provide the necessary services. The government must join forces with the private sector, non-profits, citizens, and institutions willing to steer us through these turbulent times.

Overall, a large number of the masses have been left out from the purview of the existing relief and monetary aid. This shortcoming must be plugged as soon as possible.

Note:

  1. Janata is Hindi for ‘public’.
  2. A reality check is self-evident when one relates it with the recent rigidity of the government in concealing the NSSO (National Sample Survey Office) data on consumption expenditure (used to compute poverty estimates).
  3. Safai karamcharis (cleaners), ward-boys, nurses, ASHA (Accredited Social Health Activists) workers, paramedics, technicians, doctors and specialists, and other frontline health workers.
  4. Approximation on a higher side.
  5. Given full implementation and timely realisation of the delivery of the promise.
  6. Pradhan Mantri Jan Dhan Yojana is the Indian government’s flagship financial inclusion scheme. It envisages universal access to banking facilities with at least one basic banking account for every household, financial literacy, access to credit insurance, and pension facility.
  7. Pradhan Mantri Ujjwala Yojana (PMUY) is a centrally sponsored scheme launched by the Ministry of Petroleum & Natural Gas in May 2016 to provide LPG connections to Below Poverty Line (BPL) households.
  8. MNREGA guarantees 100 days of wage-employment in a year to a rural household whose adult members are willing to do unskilled manual work at state-level statutory minimum wages.
  9. Given full realisation.
  10. Permanent Account Number
  11. Ministry of Corporate Affairs
  12. Department for Promotion of Industry and Internal Trade
  13. Annual Survey of Industries
  14. National Food Security Act
  15. Pradhan Mantri Jan Dhan Yojana
  16. Micro Units Development and Refinance Agency Bank
  17. Pradhan Mantri Jan Arogya Yojana
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