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Rolling back the induced livelihood shock

Rolling back the induced livelihood shock


The long-drawn nationwide lockdown in the wake of COVID-19 crisis, which was one of the most stringently enforced lockdowns worldwide, is beginning to be lifted up in most of the regions of India.

This editorial looks into the issue of lockdown-induced livelihood shock and suggests policy measures to prevent the shocks from further snowballing into chronic poverty.


As the majority of regions in India enter the 'unlocking' period, it is becoming clearer by the day that India’s less-privileged workforce experienced disproportionately high adverse impact of the lockdown than India's elitist class.

Several media reports and surveys have brought to light the plight of the less-privileged workforce to the surface and revealed the massive scale of falling incomes and loss of means of livelihood.

Majority of the low-waged workforce in India has been pushed into different depths of destitution depending upon the vulnerable of their occupations.


3.1 Uncertain Poverty numbers

  • Even before the lockdown began, the poverty line in India has been a matter of contention for a long time due to setting up an unrealistically low threshold line to define poverty leading to conservative numbers.
  • The ambiguity around poverty numbers have increased due to
    • irregular updating of official poverty lines and
    • unavailability of data on consumption expenditure from National Sample Surveys in recent years

3.2 Estimating poverty numbers

  • Before the lockdown was imposed in India, around 42% or (56 crores) people were ‘officially’ poor.
  • This number has been derived using the following data:
    • Household Consumption Expenditure reported in the Periodic Labour Force Survey (PLFS), 2017-18 which has replaced the employment-unemployment surveys of the National Sample Survey Office (NSSO) and
    • State-specific poverty lines based on Tendulkar Committee recommendations, which was used by the erstwhile Planning Commission in 2011 and adjusted to current price indices.
  • Apart from the 42% (56 crores) official poor, around 20 crore Indians lie in a narrow corridor of 20% above the poverty line which amounts to only a few hundred rupees over the poverty line threshold.

3.3 Lockdown induced shock

  • Given the fragile and vulnerable condition of these 76 crore population, even a modest fall in their earning would lead to a fall in consumption spending and would push a majority of them into destitution.
  • The lockdown has already initiated the process of pushing this vulnerable section into the vortex of poverty and hunger by a huge fall in income levels, job cuts and sucking up their savings.


4.1 Poverty deepening

  • Various estimates after extrapolating the PLFS data for the year 2020 suggest that during the lockdown period an additional 40 crore people were pushed below the poverty line.
  • 12crore of this lockdown induced new poor are in urban areas, while 28 crores in the rural areas.
  • Matters are far worse for people who were already below the poverty line. They have experienced poverty deepening (further deterioration of their quality of life).
  • In the pre lockdown period, 16% of the Indian population managed their daily expense with ?30 or even less per day, which is only one-third of the already low-threshold poverty line.
  • Various experts suggest this number to have risen up to 42% of the population, pushing 62 crore people into extreme poverty.
  • Such widespread destitution is unprecedented in the nation’s living memory.

4.2 Inadequate state response

  • The official response of the state to tackle the rising poverty has been described as inadequate and poorly conceived by most experts, as is evident from the second economic stimulus package announced by the Finance Minister.
  • The token increase of wages under the National Rural Employment Guarantee Act (NREGA) by ?20 (?182 to ?202) is completely insignificant compared to the magnitude of the crisis and distress levels.


5.1 Addressing rural economic distress - Revamping NREGA

  • A new revamped and expanded NREGA is the need of the hour to act as a pivot for rural recharge.
  • Given the reverse migration of workers in massive numbers to rural areas is expected to increase the demand for work by 25% due to the massive increase in rural labour supply.
  • The revamped NREGA scheme should aim to provide a minimum guaranteed employment of 20 days of work per month for at least the next six months to over 90 million workers.
  • This would require an additional financial stimulus of ?1.6-lakh crore.

5.2 Addressing food security - A Universal Public Distribution System

  • A universal PDS has been projected as a panacea for the current distress but its implementation needs to be done with a better focus on equity, identifying the rightful beneficiaries.
  • A noteworthy case is a recent experience of expanding food coupons to non-ration cardholders in Delhi, which led to the exclusion of marginalised communities including Dalits and Muslims at the lowest strata of the work hierarchy.
  • Hence, the implementation of a universal PDS should begin at the grass-root level with identification of the most vulnerable beneficiaries before expansion off the Universal PDS to the relatively better off.
  • The exclusion of the deserving sections due to errors and deficiencies in technology, like errors leading to exclusion while using biometric data to identify beneficiaries should be kept in check as it leads to huge social costs in the form of accentuated hunger

5.3 Stabilising urban economy

  • While the rural economic distress caused due to the COVID-19 crisis has been disproportionately high, the urban economy is also to feel the impact of the crisis as the economy moves towards 'unlocking'.
  • Large-scale reverse migration flows out of the urban informal sector will lead to several severe halts and jolts to the urban economy as it limps towards normalcy as the economy reopens.
  • Give the massive magnitude of destabilisation, an urban employment guarantee programme is an absolute necessity to bring the urban economy back on track and stabilize it.

5.4 An urban employment guarantee programme

  • A ‘direct’ urban employment guarantee programme on similar lines as a revamped NREGA should aim to provide guarantee 20 days of work per month to urban workers. This can be implemented through municipal corporations.
  • The wages for this urban employment guarantee programme could be fixed at 30% over prevalent MNREGA benchmark average wage in the State.
  • This new urban workforce can be used to develop key social infrastructure in urban areas like slum development, drinking water supply, toilet construction, parks and common areas, urban afforestation and social forestry.
  • Such public works programmes in the urban areas can lead to both betterment of the condition of public utilities and efficient utilisation of growth in demand for work in district towns and smaller cities, which have traditionally been outmigration hotspots across the country.
  • The urban employment guarantee programme could also be expanded to encourage a revival of small and medium enterprises (SMEs) in the most prominent economic clusters across the nation.
  • The programme could also include employer-contractor facilitated programmes in urban SMEs, construction sector projects and other business establishments to provide the workers with an equivalent amount to those working in urban SMEs.


The working class has been the backbone of the high neo-liberal growth that the world has experienced since the 1990s.

The economy has expanded by paying workers the bare minimum and the major portion of the surplus being transferred to the capitalist class (owners of means of production) with the expectation of reinvestment.

The state is an equal party to the flourishing of this model. A series of state policies had led to the following:

  • increased vulnerability of labouring class
  • the weakening of the collective bargaining power of the working class
  • large scale migration of the working class out of their native towns out of desperation and forcing them to accept low offered wages
  • forcing them to live under extreme poverty and poor living conditions
  • taking away their sense of dignity
  • curtailing any social security benefit available to the working class that could help them survive in times of difficulties

This experience is a brutal reminder for us to alter the course of economic progress and reorient development programmes, the lack and negligence of which would be severe with a high social cost including increasing hunger-related deaths and destitution and increase in social unrest and crime.

Source: The Hindu