COVID-19 poverty
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It has been over a year since the first nationwide COVID-19 lockdown. The shutdown took a massive toll on the economy, and on the lives of millions of migrant workers, and is still haunting many. As 15 millions workers are still out of work, and the poor had to cutdown on food intake to survive.

State of Working India 2021: One Year of Covid-19’, a report released by the Azim Premji University on Wednesday, shows that the pandemic has further increased informality and led to a severe decline in earnings for the majority of workers, resulting in a sudden increase in poverty.

Government relief has helped avoid the most severe forms of distress, but the reach of support measures is incomplete, leaving out some of the most vulnerable workers and households, said the report.

Vice-Chancellor of Azim Premji University, Anurag Behar, pointed out that the pandemic has revealed a systemic and moral failure that makes the most vulnerable always pay the greatest price for everything.

“We have to change this from the core. This report is a small effort in this direction. It analyses information from the first year of the pandemic to draw lessons for the near and the not-so-near future,” he noted.

The lead author of the report, Amit Basole, said that additional government support is urgently needed now for two reasons – compensating for the losses sustained during the first year and anticipating impact of the second wave.

Main findings of the report:

Employment, income bounced back in June 2020; recovery remained incomplete

  • About 100 million lost jobs during the nationwide April-May 2020 lockdown. Most were back at work by June, but even by the end of 2020, about 15 million workers remained out of work.
  • Average monthly household income per capita in Oct 2020 (₹4,979) was still below its level in Jan 2020 (₹5,989).
  • Mobility restrictions led to income losses due to decreased economic activity. A 10% decline in mobility was associated with a 7.5% decline in income.

Women and younger workers disproportionately affected

  • During the lockdown and in the months after, 61% of working men remained employed and 7% lost employment and did not return to work. For women, only 19% remained employed and 47% suffered a permanent job loss during the lockdown, not returning to work even by the end of 2020.
  • Younger workers were much more impacted, experiencing higher job losses, of a more permanent nature. 33% of workers in the 15-24 years age group failed to recover employment even by Dec 2020. This number was only 6% in the 25-44 years group.

Informal employment increased

  • After the lockdown, workers came back into more precarious and informal forms of employment. Nearly half of formal salaried workers moved into informal work, either as self-employed (30%), casual wage (10%) or informal salaried (9%) workers, between late 2019 and late 2020.

Poorer households worst affected; poverty and inequality increased

  • Though incomes fell across the board, the pandemic has taken a far heavier toll on poorer households. In April and May the poorest 20% of households lost their entire incomes. In contrast, the richer households suffered losses of less than a quarter of their pre-pandemic incomes. Over the entire eight month period (Mar to Oct), an average household in the bottom 10% lost ₹15,700, or just over two months’ income.
  • The number of individuals who lie below the national minimum wage threshold (₹375 per day as recommended by the Anoop Satpathy committee) increased by 230 million during the pandemic. This amounts to an increase in the income poverty rate by 15 percentage points in rural and nearly 20 percentage points in urban areas.

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Households coped by decreasing food intake and going into debt

  • Households coped by cutting back on food intake, selling assets, and borrowing informally from friends, relatives, and money-lenders. An alarming 90% of respondents in the Azim Premji University Covid Livelihoods Phone Survey reported that households had suffered a reduction in food intake as a result of the lockdown. Even more worryingly, 20 per cent reported that food intake had not improved even six months after the lockdown.

Government relief measures helped, but exclusions were common

  • PDS coverage far exceeds the coverage achieved by Jan Dhan so far. Across multiple surveys, around 90% of households had a ration card but the Jan Dhan coverage was much smaller, only around 50% of households had a woman-owned Jan Dhan account. However, the efficacy of PMGKY was similar for both types of relief measures.
  • The India Working Survey (a largely rural random survey in Karnataka and Rajasthan conducted in August-September 2020) showed that, conditional on eligibility (those with priority ration cards or Jan Dhan accounts), 65% of card holders received some PMGKY allocation (i.e. grains in excess of the usual quota) while 35% only received their usual PDS quota (no extra grains).

Underscoring that the impacts of the second wave are still unfolding and may be larger than those reported for the first wave, the report suggested a series urgent policy measures:

  • Extending free rations under the PDS beyond June, at least till the end of 2021.
  • Cash transfer of ₹5,000 for three months to as many vulnerable households as can be reached with the existing digital infrastructure, including but not limited to Jan Dhan accounts.
  • Expansion of MGNREGA entitlement to 150 days and revising programme wages upwards to state minimum wages. Expanding the programme budget to at least ₹1.75 lakh crores.
  • Launching a pilot urban employment programme in the worst hit districts, possibly focused on women workers.
  • Increasing the central contribution in old-age pensions to at least ₹500.
  • Automatically enrolling all MGNREGA workers who do construction work as registered workers under the Building and Other Construction Workers (BoCW) Act so that they can access social security benefits.
  • A Covid hardship allowance to 2.5 million Anganwadi and ASHA workers of ₹30,000 (5,000 per month for six months).

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