Caught in COVID waves, pavement vendors of Chennai drown in vortex of debt

The survey, a joint initiative of MIDS and the State Department of Economics and Statistics (DoES), assessed the impact of the pandemic in Tamil Nadu.

Published: 04th July 2022 08:09 AM  |   Last Updated: 23rd July 2022 11:28 PM   |  A+A-

Flower seller R Alamelu and her granddaughter in Chennai. (Photo| R Satish Babu, EPS)

Flower seller R Alamelu and her granddaughter in Chennai. (Photo| R Satish Babu, EPS)

Express News Service

CHENNAI: Three years of the pandemic put paid to a dream of three generations for 50-year-old R Alamelu. The flower seller, who lives on the streets of Broadway, had aspired for her surviving daughter to marry well, to live in a house unlike her parents and grandparents.

Instead she, like 30 other small vendors in the city The New Indian Express spoke to, found herself cutting back on her meagre expenses, losing her savings and still falling deeper into debt.

For Alamelu, the ten sovereigns of gold she'd accumulated for her daughter's wedding were the first to go. "When the lockdown was announced, I couldn't work and we couldn’t afford to eat. So, I took an informal jewel loan, pawning all the gold for Rs 1,05,000," she said.

Next, she cut back on food. "During the lockdown, my two grandchildren (from her deceased elder daughter) would eat two meals a day. I would only eat one meal," she said. Then sky-high inflation quickly followed the easing of restrictions. "I still eat only one meal a day but when possible feed the children three meals," Alamelu said.

Finally, it has been the uneasy bond of debt that has kept the family afloat, all from the informal money-lending thandal system. Her total debt in May 2022 stood at Rs 3,70,000 and counting. Altogether, she had to make daily payments, including interest, of Rs 1,400 a day to the various debtors.

To keep up with the payments, she picked up extra seasonal work, selling umbrellas in the monsoon, and water bottles in summer. Even then, she only earned Rs 800-1,000, all of which she handed over to her debtors - if she missed a payment, she’d have to pay double the next day.

Alamelu’s plight was echoed among informal sector workers and vendors near Central Station, Parrys Corner, Pondy Bazaar, Kasimedu, Kannagi Nagar and Marina Beach. All had taken loans to survive the pandemic: From chit schemes, daily thandal, banks, microfinance institutions, pawn shops or neighbours.

"According to the Tamil Nadu COVID Pulse survey conducted from June 2020 to February 2021, around 52 per cent of the respondents of their sample size of around 10,000 households reported job losses. Of the 17 per cent who had lost jobs during the third round of the survey, 69 per cent were from the informal sector," said Kripa AnanthPur of Madras Institute of Development.

The survey, a joint initiative of MIDS and the State Department of Economics and Statistics (DoES), assessed the impact of the pandemic in Tamil Nadu.

"About 13 per cent of the respondents took loans in Round One and this rose to 13.8 per cent and then fell to 11 per cent through the pandemic. Around 12 per cent took gold loans," she explained, adding although the economy was recovering, jobs were not returning.

However, Isabelle Guerin, an associate researcher at the French Institute of Pondicherry, who studies debt, pointed out indebtedness was high even before the pandemic. "The State does not maintain records and there has always been an underestimation of debts," she said.

"When everything stops, the workers in the informal sector are badly hit and this pushes them into abject poverty. As they have no social security or retirement benefits, they are more vulnerable to external shocks," AnanthPur said.

Many battled these external shocks like Alamelu through a combination of loans, mortgaging of jewellery, dipping into savings, and cutting back on food consumption, she added.

What is thandal?

"Thandal is a loan given with no collateral. Borrowers can repay Rs 100 every day or week, it's flexible. Unless you're a regular or there is some faith, borrowers have to repay the loan in 100 days. The only real consequence of not paying is being blacklisted. The thandalkaaran hold back 10 per cent of the loan amount when they lend," Guerin explained.

At the Kasimedu fish market, P Vanja explained a crueler form of thandal many turned to during the lockdown - thandal with speed vatti. "There was no income. People would borrow Rs 1,000 a day and have to repay it by evening with 20 per cent interest. Since people can't pay it back, the interest doubles daily," she said.

According to the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003, speed vatti is prohibited along with a host of other kinds of usury, including hourly vatti and kandhu vatti. Still, usury is part of life.

"Thandal is inevitable. After the lockdown, I had to pawn my relative’s jewels and take thandal to buy my stock," said S Manimuthu, a resident of Kannagi Nagar, who borrows regularly to run his vegetable shop and pay for his sons' education.

Stronger safety nets

In the first year of the pandemic, the Tamil Nadu government provided Rs 1,000 and free ration supplies to certain categories of ration card-holders. In the second year, it provided a cash assistance of Rs 4,000.

All the people The New Indian Express spoke to had received these benefits. "The government did well in reaching out to people. At the local level, zonal committees would identify who needed help," said Preetha Krishnadas, deputy director of The Banyan, an NGO working with mental health and homelessness.

However, many remain bitter. Eshwari S, a fruit seller from Parrys Corner, said, the aid aside, the Corporation’s eviction drives had hurt her business. Meanwhile, fish vendors complained the annual fishing ban from April to June knocked them off their feet again.

AnathPur said that safety nets like financial stability, savings, food security and assets that were required to keep people afloat gave way during the pandemic. "We failed them, the State failed them and the urban society failed them."

"Moving forward, the government must start documenting the informal sector. Panchayats can capture this data. Then we must ensure migrant labourers get access to schemes targeted at residents of the State," she said. 

Sujata Mody, president of the Penn Thozhilalar Sangam, urged the government to set up registration centres at vendor-heavy zones to verify and track the kind of loans people in the informal sector have taken. "This can ensure that suitable help is extended," she added.

Guerin said that instead of repeatedly waiving off loans the government should create fair credit policies to provide loans to this vulnerable community.

A loan that ‘doesn’t help’? 

One intervention the Union government initiated to help workers in the informal sector during the pandemic is the Prime Minister Street Vendor's AtmaNirbhar Nidhi (PM SVANidhi). The scheme facilitates collateral-free loans of Rs 10,000 for one-year tenure with a subsidy of 7% interest per annum and cashback of up to Rs 1,200 on digital transactions. If repaid properly, the beneficiary can borrow Rs 20,000 the next year.

Yet for those like Eshwari S, a fruit seller from Parrys Corner, the loan made little difference. "The loan isn't helping us, and on top of that, they charge a high interest rate," she said. 

Saravanan M, manager of State Bank of India, Parrys branch, explained the subsidy kicked in only with timely repayments. "Otherwise, they repay the loan at an interest of 9.9%."

The promised digital cashback is only available if the beneficiaries used Google Pay, he added. 

For Eshwari these conditions made the loan onerous. "I had to stop paying my daughter’s nursing school fees to repay this loan as we didn’t have money."

P Siva Shankar, chief manager of Union Bank of India, Anna Nagar branch, said his brand had disbursed the loans to 10 beneficiaries from 2020 till now, at an interest rate of 8-9.5%. “However, they are yet to receive the subsidy,” he added.

The Chennai Corporation, through which the loan is facilitated, conducted camps in its 15 zones encouraging vendors to take the loans. "We had a target of 96,000 and got 1,02,247 vendors' applications as of May. We only help with the application process. The bank decides whether to reject, sanction and collect the amount," an official said.

(This is part 1 of a series on debts taken during the pandemic under the Narender-Revelli fellowship jointly conducted by the Turaga Foundation and the University of Hyderabad)



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