ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Impact of National Lockdown on Rural Household’s Income

The unprecedented shutdown of economic activities led to a colossal loss of livelihoods. To understand the impact of this national lockdown on rural households’ income, the paper empirically examines the determinants of reduction in their income, and the effectiveness of government’s response in mitigating their economic hardships. The study is based on a comprehensive telephonic survey of 2,599 rural households from five eastern states—Bihar, eastern Uttar Pradesh, Jharkhand, Odisha, and West Bengal conducted during the lockdown period, June–July 2020. The econometric results highlight that (i) a number of socio-economic and demographic factors influenced income loss of rural households during the lockdown, (ii) the impact was relatively higher on the migrant labour, though it differed across the eastern states, and (iii) government cash and in-kind assistance under various social protection schemes were timely but requires expansion in both coverage and outreach.

 

India announced the world’s largest lockdown on 23 March 2020 to contain the spread of COVID-19-induced pandemic. An unprecedented shutdown of economic activities for about months across the country led to a huge loss of employment and income. The unemployment rate at the national ­level was at its peak (24%) during the periods of May and June 2020 (CMIE 2020) and the estimated economic growth was negative (23%) in the first quarter of the year (National Statistical Survey Office 2021; RBI 2021). Informal workers and migrant labourers were the worst affected by the closure of construction and other business activities, which led to a mass movement of labour back to their native places (Srivastava 2020). Although the centre and various state governments were prompt to provide free foodgrains, deposit cash transfers under the flagship programmes—the Pradhan Mantri Garib Kalyan Yojana (PMGKY) and initiate other relief measures to the poor, the crises were beyond comprehension. Various non-governmental organisations, religious institutions and individuals also came forward to extend all possible help to the affected people. But the poor seems to have borne the maximum brunt of an overall contraction in their wages and income.

Literature on the impact of pandemic-induced lockdown is limited. But it provides evidence on the agony and hardships that COVID-19 has inflicted on people in terms of physical and psychological health, inequality in access to medical and educational facilities, and expenditure exceeding their income. Singh et al (2021) reported that 59% households faced loss in income, 38% lost jobs, 83% had difficulties in accessing healthcare and 28% reduced consumption of fruits and vegetables. Among others, Mathias (2020) and Modak et al (2020) reported that the COVID-19-induced lockdown not only reduced the ­income, consumption and food security of households but also severely affected their mental state. The lockdown along with the social distancing norms dried up jobs and posed serious challenges of meeting day-to-day expenditures and ensuring adequate nutrition and health (Khanna 2020). Small businesses such as those under the micro, small and medium ent­erprises (MSMEs) faced severe financial crunch, leading to a closure of several units and job loss to many workers (Chaudhary et al 2020). In November 2020,
Basole et al (2021) found that the pandemic affected the salaried and lower-middle-class workers as well as the poor and that nearly 20% of households reported no improvement in food intake since the lockdown. This was despite the provision of additional food to a large ­section of population and financial support by the government under various flagship programmes of the PMGKY.

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Updated On : 4th Jan, 2022
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