Covid-hit 2020 saw 230 million Indians slip below minimum income threshold: Report

With the way deadlier second wave having hit the country harder, the report suggested Rs 5.5 lakh crore additional spending by the Indian government

Published: 05th May 2021 07:41 PM  |   Last Updated: 05th May 2021 09:15 PM   |  A+A-

Rupees, Case, Income

Casual daily wage labourers witnessed a 13% monthly drop in income from Rs 9135 a month in 2019 to Rs 7965 per month in 2020. (Photo | Pexels)

Express News Service

BENGALURU: 230 million people in India slipped below the national minimum wage threshold (Rs 375 per day as recommended by the Anoop Satpathy committee) in Covid-hit 2020, a report released by the Azim Premji University on Wednesday stated. 

This corresponds to an increase in income poverty rate by 15% points in rural and nearly 20% points in urban areas, as per the report. The survey said that over an eight-month period (March-October 2020), an average household in the bottom 10%  of the income group lost Rs 15700, or just over two months of income.

More than 15 million people lost their jobs permanently as Covid derailed the economy, the report based on the consumer pyramid survey conducted between December 2019-2020 went on to state. It added that the average monthly household income per capita in October 2020 (Rs 4979) was still below the January 2020 level  (Rs 5989). 

It also found that during the national lockdown in the first coronavirus wave (April-May 2020), 100 million jobs were lost, although the majority - 85 million - were later restored.

Drop in monthly earnings

On an average, an Indian worker (across formal/informal/self-employed groups) witnessed a 17% drop in monthly earnings in 2020 - to Rs 12625 compared to Rs 15210 per month in 2010. 

For salaried employees, there was a 5% drop in monthly income to Rs 27697 from Rs 29226 in 2019. The highest drop in monthly incomes was for temporary/self-employed workers at 17% and 18% - at Rs 9441 and Rs 12995 respectively, the report quoting CMIE data stated. 

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Casual daily wage labourers witnessed a 13% monthly drop in income from Rs 9135 a month in 2019 to Rs 7965 per month in 2020.

Amit Basole, Associate Professor of Economics at the Azim Premji University, who led the research, said that the employment as well as income levels by late 2020 were still not on par with the pre-COVID levels despite the reduction in the number of cases during that period.

On the basis of data released by CMIE( Centre for Monitoring Indian Economy) for January-April 2021 period, he said that the workforce participation - the number of employable people who were out of work - had not reached pre-pandemic levels, signalling a stagnation in employment/income recovery. Basole said that further with the second wave of virus hitting the country harder, the impact will definitely be on India’s workforce and household incomes.

The worst Covid-hit states of India including Maharashtra, Kerala, Tamil Nadu, Uttar Pradesh, and Delhi contributed disproportionately to job losses.  The survey stated that the pandemic has taken a far heavier toll on poorer households in April and May 2020.

Women were worst hit by the job losses due to the pandemic with 47% of the workers suffering permanent job loss during the lockdown. In comparison, only 7% of the male workers suffered permanent job losses due to the lockdown.  

For the informal working group, which constituted a large part of the study, mobility restrictions led to income losses due to decreased economic activity. "We find that a 10% decline in mobility was associated with a 7.5% decline in income. This number is useful to keep in mind when estimating the impact of future lockdowns," the report noted
Bold fiscal measures the need of the hour now

As per the survey, India's fiscal response to Covid-19 has been conservative. The impact of the second wave is still unfolding and maybe more intensely felt this time around. Coming as it does on the back of depleted savings, debt and reduced fallback options, the second wave can lead to a potentially larger impact on work, incomes, food security, health and education, the survey noted. 

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Among the various immediate policy measures to bring the working economy back on track, the report recommended extending free rations under the PDS beyond June, at least till the end of 2021, cash transfer of Rs 5000 for three months to all vulnerable households, expansion of MGNREGA entitlement to 150 days and revising the programme's wages upwards to state minimum wages, and launching a pilot urban employment programme in the worst-hit districts, possibly focused on women workers.

With the way deadlier second wave pummelling the country, the report suggested Rs 5.5 lakh crore additional spending by the Indian government, bringing the total fiscal outlay of Covid relief to 4.5% over two years.


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