Covid-19 Impact: Lockdown and Livelihood in the Lurch

This paper summarises the impact that the pandemic can have on livelihoods and the various interventions (such as the Pradhan Mantri Garib Kalyan Yojana) by the government to ease the economic burden given the existing employment patterns. Since the effects of the pandemic are still unfolding, the full impact of these welfare schemes remains to be seen.

The worldwide spread of the novel coronavirus disease (COVID-19) is severely affecting the global economy, and almost one-third to half of the global population was under some form of a lockdown by July 2020 (Kaplan et al 2020). This threatened an economic bloodbath, wherein all economic activities around the world witnessed a closure. The International Labour Organization’s initial prediction was that nearly 25 million jobs would be lost worldwide due to the pandemic and would mean income losses for workers between $860 billion and $3.4 trillion by the end of 20201. But by the end of 2020, the organisation reported a loss of 81 million jobs in the Asia Pacific region2. This would translate into a fall in consumption of goods and services and disruptions in backward and forward linkages in supply chains impacting businesses and in turn viciously affecting national economies. Significant providers of employment like manufacturing, tourism and hospitality, travel, services and the retail industries, along with small and medium enterprises, bore the acute brunt of COVID-19.

Choosing between Human Health and Economic Health

In the early days of the pandemic, the daily and total number of reported cases of coronavirus infections remained relatively low vis-à-vis other countries. However, the fear of the rapid spread of the virus came true, and it stands at 10.8 million (as on 4 February 2021), with around 1,55,000 casualties. While, of late, there has been a decline in the daily reported cases and remarkable recovery rates, at one point of time, India had close to 1 lakh positive cases every day. The inept and crippling health systems and basic infrastructure, inadequate and untrained human resources leading to poor delivery of services added to the miseries, as people remained under a nationwide lockdown.3

The irony of the situation was that while there was an acknowledgement of the need for social distancing and self-isolation and the preeminence of human lives and well-being, there were growing concerns over adding to the severity of economic and social impact that the lockdown would have on the country. This would be especially embossed considering the already prevailing economic slowdown. Cities, as engines of growth, had come to a grinding halt. The reason for this was that the “city-makers” like the daily wage migrant labourers (seasonal and circular) (estimated at over 50 million), street vendors, auto or rickshaw drivers, construction and utility worker found it onerous to survive amid no work and lack of social protection and rights or any proper inclusive policies. Similar was the plight of small businesses as well as freelancers and those operating in the gig economy, who had to bear the brunt of the national lockdown. On the other hand, big businesses and regular-salaried citizens, though bearing the cost of social distancing, could navigate the rough waters and survive. 

Livelihood in a Lockdown

Before delving into the lurching livelihood situation in India, it is important to highlight some major trends in the prevailing national-level employment. In 2018, India’s population was estimated at 136.6 crore consisting of 26% children (0-14 years) and 74%  adults (15+ years). The adult population (101 crore) includes 66%  working age people (15-59 years) and 8%  senior citizens (60+ years). As per the recent Periodic Labour Force Survey (PLFS) Report 2018-19, around 47 crore (47%) adults were working in the country. Over half (52%) of the workers were self-employed, followed by casual workers (24% ) and the remaining were regular or salaried (24%). Of these, the casual workers are the most vulnerable due to the irregular nature of their work and daily wage payment based on their work schedule (MHA 2018; MoSPI 2020). 

Table 1: Distribution of Working Persons in India in 2018-19 by Employment Type and Industry of Work (Usual Status) (in terms of %)

Industry as per NIC 2008 

Self-employed

Regular Wage/ Salary

Casual Labour

Total

Agriculture

74.1

1.2

24.7

100

Mining and Quarrying

9.2

52.3

38.5

100

Manufacturing

43.0

43.6

13.4

100

Electricity and water supply

19.9

76.3

3.7

100

Construction

10.8

5.5

83.7

100

Secondary

26.5

26.1

47.4

100

Trade

70.2

26.2

3.6

100

Transport

43.3

43.3

13.4

100

Accommodation and food services

52.8

36.9

10.3

100

Other services

22.0

74.6

3.4

100

Tertiary

43.0

51.6

5.4

100

Total 

52.1

23.8

24.1

100

Estimated workers (millions)

198.2

90.5

91.9

380.6

Note: Estimated number of workers given in this table is design based estimates and may be used as control totals for combining and arriving at rates and ratios. These figures are not intended for providing the number of workers.
Source: PLFS 2018-19.

According to PLFS 2018-19 estimates, the composition of employment by the type of industry was highest for agriculture (42.5%), followed by other services (13.8%), trade, hotel and restaurant (12.6%), construction (12.1%), manufacturing (12.1%), transport, storage and communications (5.9%), electricity, water (0.6%), and mining and quarrying (0.4%).

As it can be seen from Table 1, the proportion of the self-employed was highest in the sectors of agriculture, trade, accommodation and food services, tertiary sector, transport and manufacturing. While more than four-fifths of the workers were employed as casual labour in construction, the regular wage or salaried earners were highest in services and manufacturing sectors.

Around 7 in 10 workers (68.4%) in the non-agriculture sector were engaged in the informal sector. The deplorable condition of employment can be understood by the status of regular wage/salaried employees in the non-agriculture sector—seven out of 10 had no written job contract (69.5%), more than half were not eligible for paid leave (53.8%), and more than half were not eligible for any social security benefit (51.9%).

Thus, the jobs and earnings of around 200 million workers, including casual workers, regular or salaried workers without any job security and sole self-employed (own account or unpaid family), are at stake. This estimated figure would increase if another 30 million people who are engaged in begging, prostitution and others are also included.

Interventions at the Government Level

The absence of market activity was deemed to directly and adversely affect those vulnerable and their families. The union and state governments had made appeals to the private sector to not lay off or cut the salaries for the workers during the early days of the lockdown. Financial relief packages announced by the states during the initial phase of the pandemic are described as follows. Uttar Pradesh had announced a financial package of over Rs 353 crore to give cash handouts to an estimated 3.53 million daily wage earners and labourers (Rawat 2020). Moreover, an amount of Rs 1,000 each was announced to be given to 1.5 million daily wage labourers and 2.03 million construction workers across the state through direct benefit transfer. The beneficiaries included rickshaw pullers, hawkers and kiosk owners. The Punjab government had declared an immediate relief of Rs 3,000 to each registered construction worker in the state (PTI 2020). A total sum of Rs 96 crore had been earmarked for this purpose. The Delhi government also announced a payment of up to Rs 5,000 as pension to 8.5 lakh poor beneficiaries and free ration to those entitled to food subsidies under the public distribution system (PDS) (HT Correspondent 2020). 

According to the Economic Survey 2020-21, as part of the government's fiscal policy response to the pandemic, Rs 68,914 crore had been disbursed as of 31 December 2020 under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) to a total of 42.1 crore beneficiaries. The schemes under this were: support to Pradhan Mantri Jan Dhan Yojana women account holders, support to the National Social Assistance Programme (NSAP), Front-loaded payments to farmers under Pradhan Mantri Kisan Samman Nidhi (PM KISAN), support to building and other construction workers, 24%  contribution to the Employees' Provident Fund Organisation and Pradhan Mantri Ujjwala Yojana. Economic Survey 2020-21 also highlights the introduction of Atmanirbhar packages 2.0 and 3.0 in the third quarter of FY 2020-21 (Ministry of Finance 2021).

While promulgating the orders for a “janata curfew” to be observed on 22 March 2020, the Prime Minister in his address to the nation on 19 March 2020 announced that a COVID-19 economic response task force, chaired by the finance minister had been set up to combat the impact of the coronavirus on the Indian economy. Interestingly, the finance minister was caught unawares of such a task force during her press conference to announce several taxation reliefs measures on 24 March 2020. Most of these were related to the deferring of payments of direct taxes, goods and services tax (GST) for three months, and interest rate subvention/other relaxation on such payments. In other words, the filing requirements of these taxes has been postponed to July 2020. On the same day, the PM announced a “total lockdown” of the country starting at 00:00 hours of 25 March 2020.

After around 36 hours of the lockdown into effect, on 26 March 2020, the finance minister announced a slew of welfare measures under yet another scheme—PMGKY, amounting to Rs 1.7 lakh crore ($22 billion), and also provided the number of poor people of the country that these would cover—80 crore or two-thirds of India’s population. At least, this announcement reveals the number of the poor in the country, which the government acknowledges require support. A reality check is self-evident when one relates it with the recent rigidity of the government in concealing the National Sample Survey Office (NSSO) data on consumption expenditure (used to compute poverty estimates).

Intended to reach out to the poorest of the poor, with food, gas and money in hands, so that they do not face difficulties in buying essential supplies and are able to meet their essential needs, the major highlights of the PMGKY package are:

1. Special insurance scheme amounting to Rs 50 lakh for health workers4 fighting COVID-19 in government hospitals, wellness and healthcare centres. Under this scheme, approximately 22 lakh health workers would be provided insurance cover to fight this pandemic.

2. Pradhan Mantri Garib Kalyan Anna Yojana: An additional 5 kg of rice/wheat will be given to 80 crore poor people, above the existing 5 kg they receive, along with 1 kg pulses according to regional preferences per household free of any charge, for a period of three months.

3. Under the PM KISAN scheme, instalment of Rs 2,000 in the first week of April will be transferred to the bank accounts of 8.7 crore farmers.

4. Components of PMGKY:

  • 20 crore Jan Dhan women account holders will be covered under the relief package and an ex-gratia cash transfer of Rs 500 per month for the next three months.

  • 8 crore poor families will get free cylinders for three months under the Ujjwala scheme.

  • To prevent any disruptions in the employment of those who earn less than Rs 15,000 per month, the government will bear the cost of provident fund (PF) contribution of both employer and employee (24%) for the next three months. However, this is only for those businesses that have up to 100 employees. 

  • 3 crore senior citizens, persons with disabilities and widows will get one-time additional amount of  Rs 1,000 in two instalments, which will be given through DBT over a period of three months.

5. With effect from April 1, 2020, the wages under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) have been increased by Rs 20 per day or Rs 2,000 annually per worker on an average. as additional income to help daily wage labourers. 

6. Collateral-free loans for the 63 lakh women organised through the self-help groups have been doubled from Rs 10 lakh to Rs 20 lakh under the Aajeevika Deen Dayal Antyodaya Yojana or National Rural Livelihoods Mission.

7. Other components of PMGKY:

  • Employees’ provident fund (EPF) regulations will be amended to include the pandemic as the reason to allow non-refundable advance of 75% of the amount or three months of the wages, whichever is lower, from their accounts. Families of 4 crore workers registered under EPF can take benefit of this window.

  • State governments have been directed to utilise the welfare fund for 3.5 crore building and other construction workers created under the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 to protect them against economic disruptions.

  • The state governments will be asked to utilise the funds available under District Mineral (DMF) fund for supplementing and augmenting facilities of medical testing, screening and other requirements to prevent the spread of COVID-19 and for the treatment of the patients affected with this pandemic.

The measures by the finance minister can be summarised as too late and too little, where the existing schemes have been consolidated and portrayed as providing a major aid for the benefit of the poor. It is difficult to understand the calculation behind arriving at the figure of Rs 500 (~$7) in the Jan Dhan accounts to women and Rs 333 (<$5) to pensioners, and to what avail would this meagre sum be? For instance, even if a family spends Rs 20 per day to buy half a litre of milk, it comes to spending Rs 600 a month, leaving aside procuring vegetables. Nutrition security certainly remains out of the consideration of the government in this support package. One must not be surprised when India’s rank in the Global Hunger Index slips further down in the world rankings. Given the existing inflation and high costs of essential commodities, this scanty amount appears to be making a mockery of the poor by showcasing sheer tokenism.

As against the steps taken by other major nations5 in their fight against COVID-19, India’s relief package of around $22 billion seems minuscule and excludes other sections like small and medium sized enterprises, migrant labourers, the unorganised sector, pregnant and lactating women and children, those suffering with critical ailments, etc. This is in continuation of habitual inclusion and exclusion errors in the official database, which was also highlighted in the Economic Survey of 2016-17 that noted an estimated exclusion error from 2011-12 suggested that two-fifths of the bottom 40% of the population are excluded from the PDS. The corresponding figure for 2011-12 for MGNREGA was 65%.

Analysis and Way Forward

The unprecedented consistency of planning and coordination from different stakeholders of the government, inclusion of COVID-19 tests under Ayushman Bharat, free testing in government hospitals and reduction in the prices of tests by private hospitals, procurement of over 50,000 ventilators from the Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund (PM CARES) fund provided a much-needed respite. Yet, an immediate and detailed strategy for the execution and delivery of services remains veiled. While focusing on symbolisms, major attributes like actual figures of payment for each beneficiary, daily or weekly timeline and road map for the infusion of these support measures, their monitoring and implementation, strengthening the monetary policy stance for utilising the Rs 15,000 crore for the procurement of kits and equipment for healthcare and infusing it with more funds appears to be eschewed. The commitment of the government to inoculate the citizens through made-in-India vaccines is a silver lining. The approximate total number of doses of vaccines administered as of February 1, 2021 in the United States (US) was around 3.22 crore, in the United Kingdom (UK), 1 crore, and in India, it was 40 lakh. Yet, it must be highlighted that the UK and the US began their vaccination drives on December 13 and 14, 2020, respectively, and India rolled it out on January 16, 2021, becoming the fastest country to reach the 40-lakh vaccination mark.

The urgent need to include healthcare under “Emergency Sector Lending” and execute it on a war footing seems to have gone down well with the government, and the Union Budget 2021-22 provides a whopping 2,23,846 crore for health and well-being. The government still has the task to effectively assuage the apprehensions of the people regarding the efficacy and effectiveness of the vaccine, so as to enhance the vaccination rate given its huge population of 1.3 billion from its present 0.29 doses administered per 100 people (Our World in Data 2021; PTI 2021; Press Information Bureau 2021).

While the total aggregated amount announced for the benefit of its vulnerable sections appears to be huge, yet, per-person benefit comes out to be inadequate. Further, it is evident that the lockdown was put into place without having a well-crafted strategy, including the assured supply of essential commodities, services especially for medical care, kits, equipment, personpower and infrastructure preparedness as well as what happens to the poor and those who lose their livelihoods during this social distancing diktat and COVID-19 fears. In the absence of clear-cut guidelines and proper implementation plans, the implementation of all these announcements appears to be allusive. 

There is no proper national-level registry for the poor and people involved in informal jobs or sectors such as vegetable vendors, construction workers, rickshaw pullers, auto-rickshaw drivers and temporary staff, etc. There is an urgent need for these registries to be instituted and updated using latest digital technologies and innovations, along with a dynamic unemployment registry to provide direct economic (universal basic income), health (universal coverage) and other necessary contingency protection and security support. 

The government must fast-track the payment of delayed payments to each public and private enterprise in this time of crisis. Further, the utility bills of the most vulnerable must also be paid for by the governments. Also, to ensure that each ward (84,420 in 4,378 cities) and each gram panchayat (2,62,734 in 6,975 blocks and 706 districts) are fully equipped to serve the populace, each of them must be provided with emergency funds from the existing schemes like the Swachh Bharat Mission, Jal Jeevan Mission, etc. This will facilitate decentralisation, enable maintaining hygiene, sanitisation, providing necessary services, etc. The government must join forces with the resilient private sector, non-profits, citizens and faith institutions willing to steer through these turbulent times. 

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