Some of you have read Govind’s story (and others will get to
read it soon). He was an Ola driver in Delhi, who walked back hundreds of
kilometres with his wife and son to return to his village near the UP-Bihar
border. I was reminded of Govind as I read about (-)7.3% GDP contraction in 2020-21 – a data point, which hides more misery than what it reveals.
Conversation with Govind
When we called up Govind in late March, the first thing he
wanted to know whether we have any job for him in Delhi/NCR. He repeated his
question, with an emphasis on kuchbhi,
anything will do.
We first met Govind on the Delhi-Agra highway as he was
walking back in April 2020. By the time he could finally reach his village,
first estimates of negative growth started coming in. Once back in village,
Govind met friends and acquaintances he had not seen for years.
Immediately after the lockdown was announced, some 12 crore
jobs/livelihoods were lost. As the economy gradually re-opened, small
businesses and daily wage earners slowly got back to work. But the stringent 68-day
long lockdown had decimated the economy and it contracted by 24.4% in the first
quarter. Between September and December 2020, there was a sharp recovery but it
started sliding again in February.
Most of those who trooped back to Govind’s village, worked as
micro business owners (street vendors) or small service providers or as
unskilled labourers in construction or manufacturing. Not all of them could go
back as trade,
hotels & transport; construction; and manufacturing (three sectors, which employed most non-farm
workers) –
registered a massive decline (8%
to 18%). This led to an addition of more than 90
lakhs in the number of people engaged in agriculture. This was more like
disguised unemployment. India
Ratings noted that since March-April 2020, rural wage growth has plummetted.
Govind sounded relieved that at
least the harvest was
good. So, despite their small land holding, they are safe in terms of food
grains for another year. Agriculture, least affected by the lockdown, and NREGA
protected millions of families from starvation.
Rebuilding Dreams
At minus 7.3% GDP (de)growth, this was the worst year for the
Indian economy on record. Even though the official statistics failed to capture
most of the losses in the informal economy, it admits that the per capita
income in 2020-21 has fallen to Rs 99,694. That means, average Indians today
are poorer than what they were three years ago (in 2017-18, it was Rs 100268).
But the loss for people like Govind was far more. Without any
job and little income, they ran out of their meagre savings in no time and then
they had to borrow. This crisis – in the absence of any government aid – has hit
the poor the hardest.
Govind’s life is least affected by how much money India’s top
billionaires made in the pandemic year or how many start-ups are blossoming
into unicorns. He missed the crucial fact that the Nifty gained a record 71%
during the year.
He, however, had to travel to Varanasi and nearby towns a few
times and every time he noticed sharp spikes in petro prices. Surge
in food and fuel prices (contributed
by the government itself, as their coffers are empty) are exhausting the
already depleted household finances.
Govind
knows, there is no future for him in his village but now it would take much longer for him to come
back to Delhi and settle down all over again.
Govind
is deeply worried about his son too. Sitting at his remote village, it is
impossible for Govind’s son to access live or even recorded online classes, as
it has been the case with 70 to 80% of Indian school kids (ASER
2020). For people like Govind, their next generation is their only viable
retirement planning. Without two years of schooling, will he be able to catch
up?
Global Lessons
Despite two severe COVID waves, people in the USA and Europe have
suffered less than their economies as their governments absorbed the losses.
In at least 35 countries including Britain, Germany, France, Italy, Canada,
Malaysia, Hong Kong, companies received subsidies from their governments to
save jobs.
Instead of jobs,
the USA tried to protect incomes. Under the US CARES Act, apart from more than
$500 billion in a pay cheque protection programme for small businesses, the
government made one-off $1,200 payments to at least 2.6 crore people earning
less than $75,000 annually. In March 2021, under President Biden’s relief package,
most Americans were provided $1400. Unemployed individuals received an
additional $600 per week from the federal government (in addition to local
unemployment allowances).
In some two dozen
countries like the USA, Sweden, Denmark, Canada and France, self-employed
persons were given tax breaks and direct subsidies and compensation for 60–70%
of their losses. In many countries, consumers have been protected through subsidy
for rent/suspension in rent increase (rent is typically the most expensive item
on monthly household budget). Since they managed to protect household income, these
economies are witnessing a swift recovery.
Back to Zero
Even as millions of people lost their
jobs or businesses, India refused to provide any direct income support. India’s
relief package of 21 lakh crore had mostly promises of loans and loan
guarantees.
CMIE calculates that in one
year since March 2020, India lost nearly one crore salaried job. Protecting
those jobs would have saved not only one crore families but also another 4
crore people who work as driver, maids and small service providers and depended
on salaried workers for livelihood.
A report by the Azim
Premji University calculated that the pandemic had
pushed 23 crore Indians into poverty in just one year. Similarly, a Pew
Research report published in March 2021 estimated some 7.5 crore people in
India might have slipped back to poverty in 2020, probably doubling the number
of people living in extreme poverty. They also calculated that the Indian middle class may have
shrunk by as much as 3.2 crore (that is 1/3 to 1/4 of the total) in 2020 as a
result of the pandemic-recession.
Thus, in just one year, millions
of Indians, like Govind, ended up losing the gains of a slow but determined
progress they made over the last two decades. And this was before a devastating
second wave ravaged the country.
