Even in the prosperous days, the poverty-stricken lives in India led a frail reality, but with severity and worst times, their reality has become more and more uncertain. The lockdown in the country over the past few months has led people to hopelessness, and hit the urban poor the most. The pain of the common man can never be accurately measured, but according to a data analysis, even in the most promising scenario, close to 30% of India’s urban population could run out of their savings by June-end. They might not be able to afford necessities and essentials after June.
Contrarily, people living in rural areas have been poorly impacted, but they are relatively better with some existing savings and welfare to fall back on. According to a survey, since the lockdown was announced, approximately 84% of households underwent a loss in income. Due to the shortage of income, Indians had to depend on their existing savings to meet their essential expenses. These savings quickly finished up in the cities for the poor.
Let us consider different income-loss scenarios to determine how soon savings are running out for the impoverished 50% of Indians (rural and urban individually) during the lockdown. Live Mint reports:
“For instance, in the worst-case scenario, we assume incomes in cities fell by an average of 82% across the three phases of lockdown between April and June while in rural India, which was less affected by the lockdown, we assume incomes fell by 66%.”
In consideration with these various scenarios, the report states that even with a moderate situation in which income fell 62% in urban, and 50% in rural areas, approximately 92 million urban Indians and 89 million Indian exhausted their savings as lockdown 1.0 ended. Regarding the government’s aid to farmers and quickly resuming the economy in rural areas, it is estimated that rural Indians would still be able to afford essential consumption till June-end.
However, in case of urban India, about 139 million Indians (30% of the urban population) would be out of savings by the end of this month. In India, lockdown restrictions are solely limited to containment zones, but we are still in the fifth phase of the lockdown. Tamil Nadu CM Edappadi K Palaniswami yet again ordered a lockdown in Chennai and other adjoining areas from 19th June till 30th June due to the rising number of coronavirus cases in the city.
Live Mint generated measures of vulnerability by evaluating monthly essential consumption that comprise food, health, rent, education, power and cooking gas. Current savings and government support can cover the essentials, which also includes the income shock they have experienced in the last couple of months. But people living in urban areas, who have run out of money, have been hit harder because they’ve to bear more expenses for essentials, while having fewer savings to rely on.
The data implies that 20% of the poor in the cities have comparatively lower savings than their rural equivalents. The bottom 30% of Indian households might even have to cut down on essential expenditure or borrow to meet their necessities. For others, there has been a depletion of savings. In urban areas, these savings have dropped by 37% during the lockdown period. There’s no wonder why the lockdown triggered the migration of laborers and daily wage workers from cities.
On the other hand, people in rural areas can still rely on government support and services. For instance, the Central government has talked about relief measures to support the poor via the Public Distribution System (PDS) and cash transfers. There exist well-documented issues and injustices faced by around 144.5 million people in the month of May. But, as per Livemint, all the poor receive the Central government’s support and conservative measures to make up for the income and expenditure shocks.
According to their analysis, government support covers contributed cereals through the Public Distribution System and ₹500 cash transfers per month to women with Jan Dhan accounts, for both urban and rural households. But rural households received additional support through an advance payment of ₹2,000 under the PM Kisan scheme.
The evaluation of government support might be critical in limiting the rural poor from entering poverty. These figures conceal a notable shift at the State level. A few States faced severe lockdowns, some were better at implementing the relief measures, while some also provided relief to the poor.
The Centre and the States are collaboratively investing in new initiatives and gradually reopening the economy. This will benefit the poor, but the damage might have already happened. For instance, the rural poor who seem fortified from the crisis are likely to have displaced their prolific expenses i.e. investment towards the next crop cycle, with consumption.
The negative impact on productivity will be felt long after the lockdown is finally uplifted. Likewise, research has revealed that even a few months of interruption in children’s education can prevent their long-term development. Considering that these children and the workers have already been forced to leave cities, extra food or cash transfers may be too little, too late.