Coronavirus: Rural India hit hard by pandemic-induced economic downturn

Mr Sanjay Kumar (left) with a relative at an expressway in Noida, India, on March 28, 2020.
Mr Sanjay Kumar (left) with a relative at an expressway in Noida, India, on March 28, 2020.ST PHOTO: DEBARSHI DASGUPTA
Indian migrant workers make the long walk home to their villages from New Delhi on March 28, 2020.
Indian migrant workers make the long walk home to their villages from New Delhi on March 28, 2020.PHOTO: EPA-EFE

NEW DELHI - This year was looking bright for the Kumar family in Uttar Pradesh's Chandour village. They had finished building a modest two-room house this year and Sanjay, 22, their eldest son, had found a job at an insulation unit in Noida, one of Delhi's satellite cities. His salary was expected to help them repay their debt of 45,000 rupees (S$835), incurred in the construction of the house.

But then the Covid-19 pandemic struck, shattering their dreams and threatening to cast the family of eight back into poverty.

On March 25, India began an abruptly declared 21-day lockdown, forcing hundreds of thousands of jobless migrant workers to trudge back home from various Indian cities.

Mr Sanjay Kumar, who earned around 10,000 rupees per month and lived in a rented room, was one of them. He walked several kilometres and then stood for eight hours in a packed bus, yet relieved to be back home at the end of the ordeal. The initial relief, however, has given way to mounting concerns.

"I worry about what the future holds for us," Mr Kumar told The Straits Times on the phone from his village.

He was last paid in February and has not heard from the contractor he worked for since. The Kumars received food rations and a cooking gas allowance from the government this month, part of its efforts to help cushion the poor from the pandemic's impact. But this will not see them through in the long run.

"I hope the factories open soon so that I can return to work and earn. How else will we survive and repay the debt?" he added.

Families like the Kumars in rural India have been hit the hardest by the ongoing coronavirus-prompted economic crisis. This downturn threatens to undermine the gains India made, when it lifted 271 million people out of poverty between 2006 and 2016.

With an estimated 50 million individuals losing their jobs in the first two weeks of the lockdown, not only have remittances from family members who worked in cities dried up, but it has also become increasingly difficult for farming activities to continue in India's villages, including harvesting and selling the standing winter crop.



Arun (right, in grey) with family and friends as they journey from the Indian city of Noida to his village in Uttar Pradesh’s Mainpuri district, on March 28, 2020. ST PHOTO: DEBARSHI DASGUPTA

The International Labour Organisation warned last week that about 400 million workers engaged by the informal economy, which accounts for a staggering 90 per cent of the country's total workforce, risk falling deeper into poverty during the crisis. A report released by the World Bank on Sunday stated that the pandemic will reinforce inequality in South Asia, urging governments to ramp up action to protect their people, especially the poorest and most vulnerable, including through temporary work programmes.

The Indian government announced a 1.7 trillion rupee financial package on March 26, comprising direct cash transfers and free food. But barely amounting to 1 per cent of India's gross domestic product, the package has been described by many as insufficient.

 
 
 
 

"There is a need for liquidity, making cash available in the hands of the poor who have lost jobs," Mr Devinder Sharma, an analyst of India's food and agricultural policy, told The Straits Times.

He added that the lockdown has worsened an already ongoing slowdown in the Indian economy.

"The emphasis should be on creating demand," he said.

One of the key measures announced in the relief package was a monthly allowance of 500 rupees for three months for women bank account holders under the Pradhan Mantri Jan-Dhan Yojana, a government initiative that seeks to ensure universal access to banking facilities.

"That's just not enough. They should consider raising this entitlement to 1,500 rupees and also announce a similar allowance for male account holders," Mr Sharma said.

The government has also said it will raise the daily wage of workers participating in a programme that guarantees employment in rural areas by 20 rupees for 100 days, giving families a much needed 2,000 extra rupees.

Migrants who returned to their villages have found a crisis brewing there too. Farmers have been unable to harvest their crops for a variety of reasons, including restrictions on mobility and lack of access to labour.

This includes the Kumars, who share a field less than 0.4ha in size with their extended family. A wheat crop stands ready to be harvested but the family have been unable to step out because of the lockdown. "We will have to take a call soon to see what we can do with the crop," said Mr Kumar.

Many of those who have harvested their crop have been unable to transport their produce to wholesale markets, forcing them to sell it at dirt-cheap rates or, worse, just dump their harvest.

A farmer in the southern Indian state of Karnataka committed suicide last week after being unable to sell his harvest because of the lockdown.

"A cow will give milk whether it is under a lockdown or not, the tomato crop will ripen when it has to. What can the farmer do?" added Mr Sharma. "The entire supply chain has been disrupted because of the lockdown and the farmers have suffered a great economic loss. We have to stand up and compensate them at this juncture."

He argued that farmers have been left largely untouched by the relief package but for the move to "front-load" a payment of 2,000 rupees in April, an amount they were anyway expected to receive this month under a financial support programme that guarantees 6,000 rupees annually for farmers.

"Looking at the losses suffered, this amount should be increased to 6,000 rupees for the Apr-June quarter for every farmer, including tenant farmers," Mr Sharma said.

The government is expected to announce an extension of the nationwide 21-day lockdown that ends on April 14. However, given the crippling cost that turning off India's economic engines has inflicted on its people for the last three weeks, the government could allow some low-risk economic activities to gradually restart in this second phase of the lockdown.

 
 
 

This may bring relief for Arun, a 24-year-old tailor, who had to return home in Uttar Pradesh's Mainpuri district last month with his wife and three children, after being stranded in his rented tenement in Noida without any work. With just around 20,000 rupees in savings and a debt triple that amount, he is eager to get back to work.

"If the factories don't open, I will have to find work in the village here, maybe as a labourer in someone's field," he told The Straits Times.

For migrant workers like Arun, who moved to cities because of lack of suitable opportunities in rural India, that would signify starting all over again. According to the Economic Survey of India 2016-17, there are more than a hundred million migrant workers in the country, most of them migrants who have shifted from rural to urban pockets.

This was largely a result of agriculture, which serves as the backbone of the rural economy, becoming increasingly unsustainable due to the dwindling size of landholdings , the rising cost of inputs, poor irrigation facilities and stagnating financial returns.

Prodded further on what other work he could take up in his village, Arun stoically replied: "Let us see what fate has in store for me."