Bangalore, May 6, 2021: A new report, ‘State of Working India 2021: One Year of Covid-19’, released by Azim Premji University report documents the impact of one year of Covid-19 in India, on jobs, incomes, inequality, and poverty. It also examines the effectiveness of policy measures that have thus far been undertaken to offer relief and support.
Finally, seeing that India is in the midst of an even more deadly second wave, it offers some policy suggestions for the near and medium-term future.
Says Vice-Chancellor of Azim Premji University, Anurag Behar: ‘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’.
The report 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. Women and younger workers have been disproportionately affected. Households have coped by reducing food intake, borrowing, and selling assets. 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.
Says the lead author of the report, Amit Basole: ‘Additional government support is urgently needed now for two reasons - compensating for the losses sustained during the first year and anticipating the impact of the second wave. This can include continuing free rations beyond June, additional cash transfers, an expanded MGNREGA, and an urban jobs programme.’
The main findings of the report
Employment and incomes bounced back in June 2020, but recovery remained incomplete
Women and younger workers were disproportionately affected, and many could not return to work even by the end of the year
There was a large increase in informal employment
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 were worst affected, and poverty and inequality has increased.
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 moneylenders. An alarming 90 per cent 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 also common
The report surveyed evidence on the reach of food and cash elements of last year’s support packages. 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). For cash, out of those having women-owned Jan Dhan accounts 60% received one or more transfers, around 30% did not receive any transfers (and 10% did not know).
Bold measures will be required to emerge stronger from the crisis
These measures, taken together, will amount to approximately ₹5.5 lakh crores of additional spending and bring the total fiscal outlay on Covid relief to around 4.5% of GDP over two years. We believe that this large fiscal stimulus is justified given the magnitude of the crisis. For example, the cash transfer is just equal to incomes lost last year by the poorest 10% of households, leaving alone the second wave impact.
The full report is available online.