A University of Pennsylvania’s Wharton School of Business-led study analyzed how households in India are coping with the lockdown measures in the country amid the COVID-19 pandemic.
India has extended its nationwide lockdown in containment areas through June.
According to the Johns Hopkins University’s dashboard, as of June 8, India was seventh on the list of countries with the most infections with 258,090 positive cases and 7,263 deaths, the university report notes.
But also compelling is the pile-up of economic misery the lockdown has wrought. In the latest quarter ended April 20, India’s GDP grew the slowest in 11 years at 3.1 percent, and is expected to contract by 6.8 percent in the current fiscal year, the report notes.
The economic distress in India caused by the lockdown is dire. Nearly 84 percent of Indian households are seeing decreases in income since the lockdown began, according to a recent study by experts at the University of Pennsylvania, University of Chicago and the Mumbai-based Centre for Monitoring the Indian Economy, titled “How Are Indian Households Coping Under the Covid-19 Lockdown? 8 Key Findings.”
The study found a “sharp and broad negative impact on household income” as the pandemic diminished their staying capacity.
Nearly a third of all households will not be able to survive beyond a week without additional assistance, it stated.
That harsh statistic finds corroboration in the unemployment rate, which had crossed 27 percent in early May, up nearly four-fold from levels in January-February, according to CMIE data, the report notes.
The jobless rate has since dropped to less than 24 percent, it added.
The study’s authors are Marianne Bertrand, professor of economics at the University of Chicago Booth School of Business and faculty director of its Rustandy Center for Social Sector Innovation and UChicago’s Poverty Lab; Kaushik Krishnan, chief economist at the CMIE; and Heather Schofield, assistant professor of medical ethics and health policy at the Perelman School of Medicine and a Wharton professor of business economics and public policy.
The fall in incomes affected people in the lower and middle segments of the income distribution most severely, the study found. Households in the lowest of the five income groups had average monthly per-capital earnings of less than Rs. 3,800 (about $50), while those at the high end made between Rs. 12,374 and upwards of Rs. 1 lakh ($167 to $1,370 and more), according to the report.
Households in the middle-income groups are hurt disproportionately more perhaps because they are most likely to be dependent on sources of income that are hit due to the lockdown, the study’s authors stated.
Rural households have seen disproportionately more distress than those in urban India during the lockdowns. Incomes have fallen at some 88 percent of rural households, compared to 75 percent at urban households, the study found.
Higher-income households in urban India have shown more “resilience” than their rural counterparts. That is because working out of home is possible for many urban jobs, and therefore they are “relatively protected,” the authors noted, according to the report.
Only 30 percent of households are able to survive one month or more without additional assistance.
“Crucially, 14% of the sample is already out of funds and risks immediate and severe deprivation if they are unable to borrow or receive additional benefits,” the report warned.
“Rapid distribution of in-kind or cash transfers is needed to prevent a sharp increase in malnutrition and severe deprivation. Such transfers will also likely promote a more robust recovery as the country is able to reopen,” it said.
The Indian government has announced three rounds of stimulus programs totaling nearly Rs. 21 trillion ($266 billion). That includes a Rs. 7.2 trillion liquidity package the Reserve Bank of India had unveiled in February before the coronavirus, which it followed up with other measures to stem the pandemic-induced economic slowdown, according to the report.
Schofield saw the casualties of the lockdown extending beyond cash and food shortages, and urged policy action wherever possible. In the short term, she called for the government to focus on preventing malnutrition, and continuing to provide maternal and child health services, such as vaccinations.
In the medium term, the top challenge will be to revive the economy.