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Resource centre on India's rural distress
 
 

Second wave wreaking havoc on rural lives. Will it impact rural livelihoods as well?


With the rise in Covid-19 daily new cases and daily new deaths since March this year, media reports (please click here and here) on migrant workers returning back to their native places (i.e. places of origin) from migration destinations (i.e. workplaces likes cities and large industrial towns to where the informal and low skilled workers from the marginalised sections of the society migrate seasonally, and sometimes for a longer duration, to get work for sustaining livelihoods) came to the fore.

Data accessed from https://www.covid19india.org/, which is a crowdsourced platform and an independent aggregator of daily Covid-19 figures and information (created by techies and citizen volunteers), indicates that on 1st March this year, the total number of novel coronavirus new cases (confirmed ones) was 12,270, which went up to 81,398 new cases on 1st April, 2021. As a result of the total number of new cases per day quadrupling in April alone, the number of new cases was found to be almost 3.93 lakhs on 1st May this year. Congregations during religious festivals (Kumbh mela) and political rallies that were held during the recent state legislative assembly elections (aside from panchayat polls in Uttar Pradesh) led to a massive jump in daily new Covid-19 cases in April-May this year.

Test positivity ratio (i.e. the proportion of tests that turned out to be positive) too has also exhibited an upsurge in the last two month. It increased from 1.6 percent on 1st March this year to 7.3 percent on 1st April, and further spiked to reach 21.7 percent on 1st May.

Media reports suggest that unlike last year (i.e. around May-June 2020), testing of returnee migrant workers with symptoms has not been done in April this year. Similarly, returnee migrant workers coming back to their native places in Bihar have not been quarantined for two weeks in March-April this year, which was not the case in May-June last year. Therefore, the infection spread quite fast from urban to rural areas this year, causing much damage during the second wave in April-May, whereas the restrictions imposed last year contained the spread of the novel coronavirus infection in the rural areas to a large extent. In comparison to urban areas, rural areas were less hit by the Covid-19 mayhem during the first wave last year. Although the actual number of Covid-19 cases and deaths is mounting in rural areas, there has been an effort to suppress the official figures in some states. Test results in various districts of Uttar Pradesh are being delayed. Aside from the arrival of a larger number of dead bodies in crematoriums during April-May this year for the last rituals in comparison to the normal times, corpses have been found floating in the river Ganga in Uttar Pradesh and Bihar. This fact too has contradicted the official narrative that the Covid-19 situation is under control in states like Uttar Pradesh.   

It is generally said that the risk of Covid-19 spreading in urban areas is more vis-à-vis the rural areas. It is because the population density is higher in urban areas in comparison to the rural areas. In urban slums and shanties, the poor residents face a greater risk of getting infected by Covid-19 because they live in congested houses on rent. However, the State Bank of India's Ecowrap publication dated 7th May, 2021 has stated that the share of rural districts in new cases has increased to 45.5 percent in April 2021 and further to 48.5 percent in May 2021 in comparison to 36.8 percent in March this year, thus indicating the increase in rural penetration of the infection. Data analysis by the SBI research team shows that Maharashtra’s rural districts were the most affected by Covid-19 new cases in March 2021 (11 of 15 worst affected rural districts from Maharashtra). However, the infection has spread to other states since then, including Andhra Pradesh (5 in top 15 worst affected rural districts), Kerala (2 districts), Karnataka (1 district), Rajasthan (1 district) and Maharashtra (6 districts). Although Chhattisgarh had 3 rural districts in the top 15 worst affected rural districts during March, it has no district now in that list.

While the second wave is wreaking havoc on rural lives, the key question one can ask is whether it will impact rural livelihoods. Let us know what the experts say.

In April this year, the Centre for Monitoring of Indian Economy (CMIE) reported that the unemployment rate in rural areas (i.e. 7.13 percent) increased to a higher level in comparison to the previous three months. The last time this kind of spike in rural unemployment rate happened was in December 2020 when it attained 9.15 percent. Kindly consult figure-1.   

 

Figure-1 also shows that the unemployment rate in urban areas (i.e. 9.78 percent) during April this year reached its highest point since September, 2020. It was in August last year when a high urban unemployment rate to the extent of 9.83 percent was noticed. Thus, it is clear that the avenues for jobs and employment have been badly hit in both rural and urban areas. As a result, the national level unemployment rate in April this year reached a four-month high of 7.97 percent.  

Mahesh Vyas of CMIE has observed a number of things happening in April. In a recent article, he has mentioned that while the labour force (comprising those who are employed plus those who are unemployed i.e. those who are willing to work and are actively looking for work but unable to find any) shrank by 1.1 million in April, the total number of employed reduced by a much larger 7.35 million. The size of the labour force shrank by nearly 1.1 million in April 2021 to 424.6 million in comparison to 425.8 million in March. The total number of employed decreased from almost 398 million in March to 390.79 million in April this year.

Due to loss of employment during April, more than a million workers were forced to leave the labour force (as they felt dejected), at least temporarily. So, the Labour Force Participation Rate (LPR i.e. percentage of working age people working or looking for work) fell for the third consecutive month in April to arrive at 39.98 percent. At this level, it is the lowest LPR since May last year, the month when a stringent nationwide lockdown was still in force, says Vyas. The decline in LPR this year is the result of local lockdowns implemented in several states, including Maharashtra and Delhi.

The total number of unemployed who were willing to work and were actively looking for work but unable to find any grew by 6.2 million from 27.7 million in March to 33.9 million in April this year.

According to Vyas, "[p]eople who left the labour markets in dejection did not leave the markets entirely. They remained at the periphery as unemployed labour that was willing to work if work became available although they were not actively looking for work. This set, of unemployed people who were willing to work but were not actively looking for work swelled from 16.1 million in March to 19.4 million in April."

Mahesh Vyas has cautioned in his article that while the fall in the LPR could be attributed to the partial lockdowns implemented in several states, the fall in employment cannot be attributed to the lockdowns. Of the 7.35 million people who lost employment in April, about 6 million losses were from the agricultural sector. April being a lean month for farm employment (i.e. the period prior to which rabi crop has already been harvested and preparations for kharif crops is yet to start) led to a reduction in agricultural employment from 120 million in March to 114 million in April. Besides, daily wage labourers and small traders also witnessed 0.2 million job losses in April 2021.

During February-April this year, salaried employees witnessed job losses amounting to 8.6 million. In April alone, salaried employees faced a loss of 3.4 million jobs. The cumulative loss of salaried jobs since the beginning of the pandemic is computed to be 12.6 million. During 2019-20, there were 85.9 million salaried jobs. As of April this year, there were just 73.3 million jobs for salaried employees.

The salaried job losses were found to be disproportionately located in rural India. Although the urban salaried jobs accounted for 58 percent of total salaried jobs in 2019-20, they accounted for only 32 percent of the job losses incurred till April 2021. The rural salaried jobs that accounted for 42 percent of the total salaried jobs in 2019-20, on the other hand accounted for 68 percent of losses incurred till April 2021.

The disproportionately high share of rural salaried jobs in the losses indicate that the damage is mostly borne by the medium and small scale industries that are located primarily in rural areas.

In his conclusion, Vyas says that the "[p]rospects for jobs look bleak during 2021-22. The second wave of Covid-19 has stalled economic recovery. Professional forecasting agencies have been scaling back their projections for the year. New investments that could create jobs in large numbers are unlikely to be made during the year. Capacity utilisation was low at around 66.6 percent as per the RBI’s OBICUS. This is unlikely to have improved since then. The government may be required to provide support under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) once again this year to absorb some of the stress on livelihoods. In April 2021, 301 million persons were provided jobs under the scheme. This is more than twice the employment provided under the scheme in April 2020."

In a recent interview, economist Jean Drèze has said that the working class in India is going to face a serious livelihood crisis thanks to the second wave of the pandemic and the local lockdowns imposed by various states. If all the states impose local lockdowns together, then that will add up to a nationwide lockdown, says Drèze. Owing to the widespread fear of infection, it will be difficult to revive economic activity this time. Despite mass vaccination, it will not be possible to avoid intermittent crises for a long time. Due to the high level of indebtedness among borrowers and low level of savings among the masses (owing to the livelihood crisis already experienced during the first wave) in comparison to last year, further borrowing to stay afloat during the crisis will not be possible. Although relief packages were declared last year, the government has so far not discussed the relief measures to meet the challenges of the second wave. He has alleged that the Government was in a denial mode all along the Covid crisis and the health services have collapsed. Drèze has said that the public expenditure on health needs to be raised further. He has asked for expanding the coverage of the public distribution system (PDS) and providing supplementary food rations to all ration card holders beyond the two months proposed period. He has also asked for strengthening the PDS, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), the National Social Assistance Programme (NSAP), and the Integrated Child Development Services (ICDS) scheme.   

In this context, it is essential for us to consult a recent report by the Centre for Sustainable Employment, set up by the Azim Premji University to conduct and support research in areas of work, labour, and employment, which has documented the impact of one year of Covid-19 in India on jobs, incomes, inequality, and poverty. Although the pandemic had struck the country last year when its economy was already slowing down, it further accentuated problems like informality, inequality and poverty. Since the report has been released at a time when the Covid situation is quite grim in India, the readers have been advised by the authors to consider the findings as provisional.  

Based on data sources such as the Consumer Pyramids Household Survey from the Centre for Monitoring Indian Economy (CMIE-CPHS), the Azim Premji University Covid-19 Livelihoods Phone Survey (CLIPS) and the India Working Survey (IWS), the State of Working India 2021 report mentions that roughly 10.0 crore people lost jobs during the countrywide April-May 2020 lockdown. Although many joined work by June 2020, nearly 1.5 crore workers remained out of work even by the end of 2020. The per capita average monthly incomes (in October 2020) remained below pre-pandemic levels (in January 2020 and February 2020). Please see figure-2.

 
Figure 2: Employment and income had not recovered to pre-pandemic levels even in late 2020

Sources and notes: Executive Summary, State of Working India 2021: One year of Covid-19, Centre for Sustainable Employment, Azim Premji University, please click here to access

Authors’ calculations based on CMIE-CPHS. Incomes are in Jan 2020 prices and adjusted for seasonality.
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The share of aggregate income pertaining to labour in the GDP has shrunk by more than 5 percentage points from 32.5 percent in the second quarter of 2019-20 to 27.0 percent in the second quarter of 2020-21. Almost 90 percent of the fall in aggregate income pertaining to labour occurred due to a reduction in earnings and the rest 10 percent took place on account of loss of employment.

Some states such as Maharashtra, Kerala, Tamil Nadu, Uttar Pradesh, and Delhi have contributed disproportionately to job losses observed as per the CMIE-CPHS data i.e., their share in job losses (during September-December 2020) exceeded their share in the pre-pandemic workforce (during September-December 2019). However, states such as Andhra Pradesh, Telangana, Gujarat, Madhya Pradesh and Bihar have roughly equal shares in job losses as their share in the entire country's workforce. On the contrary, Karnataka, West Bengal, Odisha and Jharkhand are under-represented in the job loss numbers in comparison to their share in the total workforce.

Figure 3: Extent of employment loss varies directly with case load

Sources and notes: CMIE-CPHS data for Sept-Dec 2019 and Sept-Dec 2020. Please click here to access the figure for explanation of the job loss representation index. Data on confirmed Covid cases per month for the same period are obtained from PRS Legislative Research (https://prsindia.org/covid-19/cases).

State of Working India 2021: One year of Covid-19, Centre for Sustainable Employment, Azim Premji University, please click here to access
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The State of Working India 2021 report finds that a higher average Covid case load (confirmed cases per month over the four month period being analysed) has been associated with a higher job loss representation index i.e. ratio of the state’s share in jobs lost to its share in India’s workforce. An econometric exercise done by the research team of CSE shows that some states which have a representation index greater than one (such as Maharashtra) lie close to the regression line, hinting that the extent of job loss is well predicted by the Covid load, whereas states such as Uttar Pradesh, Tamil Nadu, and Kerala are farther away from the regression line, indicating that there are other factors, which can explain/ determine the job loss. Although Delhi is an outlier, even when it is removed from the analysis, confirmed case load remains significantly correlated with the job loss index, states the CSE 2021 report. Kindly consult figure-3.

Please click here to access the main findings of the report titled State of Working India 2021: One year of Covid-19 by Centre for Sustainable Employment, Azim Premji University.   

References

State of Working India 2021: One year of Covid-19, Centre for Sustainable Employment, Azim Premji University, please click here to access

Executive Summary, State of Working India 2021: One year of Covid-19, Centre for Sustainable Employment, Azim Premji University, please click here to access

Unemployment Rate in India, Centre for Monitoring Indian Economy, please click here to access

Unemployment in India: A Statistical Profile, January-April, 2020, CMIE, please click here to access

Economic Disruptions Gain Momentum as Cases Surge: Opportunity for Administrative Reforms? State Bank of India Ecowrap, Issue No. 08, FY22, dated 7th May, 2021, please click here to access

OBICUS Survey on the Manufacturing sector for Q3:2020-21, Reserve Bank of India, released on 7 April, 2021, please click here to access

Spread of COVID-19 in rural Bihar quickened by failure to test returning migrants -Umesh Kumar Ray, CaravanMagazine.in, 12 May, 2021, please click here to access

Is COVID-19 test data being fudged in UP? DTE investigates -Vivek Mishra, Down to Earth, 12 May, 2021, please click here to access

Nearly 100 bodies found floating in Ganga, spark panic in Bihar, Uttar Pradesh -Santosh Singh and Asad Rehman, The Indian Express, 12 May, 2021, please click here to access

India might see 'serious livelihood crisis', says economist Jean Dreze, PTI, The Economic Times, 11 May, 2021, please click here to access

Job losses mount in April -Mahesh Vyas, CMIE, 10 May, 2021, please click here to access 

Dr. Rakesh Mishra, member of the Indian SARS-CoV-2 Genome Sequencing Consortia (INSACOG), interviewed by Karan Thapar, TheWire.in, 4 May, 2021, please click here to access

Covid-19 lockdowns return, with a change: migrants are now mostly single, male -Karishma Mehrotra, The Indian Express, 8 April, 2021, please click here to access

Better to leave now: Migrant workers in Delhi, Mumbai head home amid fear of lockdown, IndiaToday.com, 8 April, 2021, please click here to access

Image Courtesy: MKSS Rajasthan