Rolling back the induced livelihood shock

By, Sumit Mazumdar is a Research Fellow, Centre for Health Economics, University of York, U.K. Indranil is an Associate Professor, School of Government and Public Policy, O.P. Jindal Global University, Sonipat, Haryana

Context

* Several news reports and surveys on the plight of India’s less-privileged workforce during the lockdown have highlighted the massive scale of falling incomes and loss of means of livelihood.

* Many have been pushed into various depths of poverty depending on how vulnerable their occupations were.

Pre-shock conundrum

* Irregular updating of official poverty lines and unavailability of data on consumption expenditure from National Sample Surveys in recent years have added to the ambiguity around poverty estimation in India.

* According to the household consumption expenditure reported in the Periodic Labour Force Survey (PLFS), 2017-18 (which replaces the employment-unemployment surveys of the National Sample Survey Office) and applying State-specific poverty lines (used by the erstwhile Planning Commission in 2011 based on the Tendulkar Committee recommendations, adjusted with current price indices), about 42% or around 56 crore people were ‘officially’ poor before the lockdown was announced.

* Highlighting how closely packed people are towards the lower half of the consumption expenditure distribution, another 20 crore people were within a narrow band of 20% above the poverty line.

* In most parts of the country, this amounts to a few hundred rupees over the poverty line threshold. A modest dip in earnings — and hence a fall in consumption spending — would push a majority of them into the vortex of poverty and hunger.

Poverty deepening

* Our estimates from the PLFS data extrapolated for the year 2020 suggest that about an additional 40 crore people were pushed below the poverty line due to the lockdown.

* Around 12 crore of this lockdown-induced newly poor are in urban areas and another 28 crore people are in rural areas.

* Those who were already poor are going to suffer a further worsening in their quality of life, a phenomenon known as poverty deepening.

* Before the lockdown, around 16% of the population had per capita consumption expenditure of about a third of the poverty line, managing their daily expenses with ? 30 per day or less.

* After the lockdown, this could swell to more than 62 crores (47%) people pushed to such extreme poverty.

Inadequate state responses

* The second economic stimulus package announced by the Finance Minister exposes the class nature of the current political dispensation more than ever.

* A token increase in National Rural Employment Guarantee Act (NREGA) wage by? 20 (?182 to ? 202) seems like a joke in the light of the overall magnitude of the crisis.

* Undoubtedly, a revamped, expanded NREGA needs to be made the fulcrum of the rural recharge.

* The demand for work is anticipated to increase by 25% with reverse migration-fuelled increase in rural labour supply.

* The revamped scheme would require providing 90 million workers guaranteed employment of 20 days of work/month for at least the next six months. This means an additional financial stimulus of ?1.6-lakh crore.

* Universalisation of the Public Distribution System has been widely talked about but needs better equity focus in implementation.

* Recent experience of expanding food coupons to non-ration card holders in Delhi suggests that such measures are likely to exclude marginalised communities including Dalits and Muslims at the lowest strata of the work hierarchy.

* The exclusion errors of IT-based attempts to coverage have huge social costs in the form of accentuated hunger.

Stabilising urban economy

* Given the magnitude of the destabilisation, an urban employment guarantee programme becomes a dire necessity to stabilise the urban economy.

* A ‘direct’ employment programme implemented through municipal corporations could be introduced to guarantee 20 days of work.

* This can be used to develop key social infrastructure in urban areas including slum development, drinking water supply, toilet construction, parks and common areas, urban afforestation and social forestry.

*An ‘indirect’ branch of this programme can be used to encourage a revival of small and medium enterprises (SMEs) in the most prominent clusters.

* This could include employer-contractor facilitated programmes to provide wage subsidy of an equivalent amount as in the direct programme to employers of urban SMEs, other business establishments and construction sector projects.