Economics Minor (203)

Course Instructor - Nishibrata Hazarika

India’s economy during Pandemic and the migrant

story

Submitted by-
Chirantan Kashyap
UID-SM0120017
Introduction

“India is closed” this is what the newspaper headlines read over April till May
during 2020, and this is what is going to continue over this year too. All over the
news channels, newspaper cuttings you could see empty roads, people travelling
between two states on foot. People losing jobs, going bankrupt, switching to
different sectors for job was a common sight. The beloved dream of $ 5 trillion
dollar economy now seemed a farfetched dream. The earlier long strides taking
economy of India now seemed to be on a standstill, on its knees to survive the
economy.

Various studies have been conducted to see the effect of pandemic that it had on
the poverty scales of India, and how badly it hit the economy. According to Pew
the number of persons in the poverty line is positioned at 13.4 crorers thereby
negating the previous improvements that India made regarding this burning issue. 1
The World Bank already made an assumption that as much as 150 million people
will be forced towards poverty and India would be major contributor towards
it.2The economy of India is according to development economists, India’s
development story has been about ‘two India’s’ defined by increasingly unequal
distribution of incomes.3 And these unequal incomes had different strategies to
survive through the lockdown, the one who could afford work from home were
much more poised to survive and the one who couldn’t were facing the heat. Many
people were on the verge of poverty, incomes were at all time lowest, and people
were losing jobs left and right. So as a disease the corona virus was deadliest but it
was not only concentrated health wise but also it affected the economy. A single
disease brought the whole world’s economy into stand still, a single disease
prevented people from going outside their homes, and never have the modern
world had seen such a disease which impacted the world in such a global scale.

And the case of India had to face the heat of such a deadly virus and it brought the
age problem of poverty along with it.

History of poverty in India

1
THE HINDU, https://www.thehindu.com/business/Economy/indias-gdp-was-on-a-downward-slope-even-before-
covid-19-wreaked-havoc/article32502173.ece (23rd May, 2021)
2
THE WORLD BANK, https://www.worldbank.org/en/news/press-release/2020/10/07/covid-19-to-add-as-many-
as-150-million-extreme-poor-by-2021 (23rd May, 2021)
3
Drèze, J., & Sen, A. (2013). An uncertain glory: India and its contradictions. London, UK: Penguin
Poverty in India is a burning issue. It has been part of many election manifestos
part of many political leaders’ speeches but it is still the very part of the society.
When the economy faced an overhaul change as regarding its economic policies in
1990 when liberalization was first introduced in India it also introduced economic
disparity among the poor’s of this country and rich. 4 The Indian government
brought many changes which had an aim to bring the poor in the same stage as the
rich or at least be in a better position but the performances of such policies didn’t
have a desired result, surely it had worked brilliantly in some of the sectors but it
was quite limited5. Policies such as Mahatma Gandhi National Rural Employment
Guarantee Act(MNREGA) whereas did have a brilliant thought behind it to
provide employment to every section of the society but corruption and not an able
administration destroyed such a wonderful project. And it is not that economist
have not realized for a more inclusive growth is the most vital thing for the
economy to grow as a whole but very little or no steps have taken for it. The
disparity could be seen growing among the poor this can be seen through various
committees that are made throughout the years to see the plight of the poor in the
country and establish the below poverty line measure There were many committees
to assess poverty in India some of them are Working Group of planning
commission, 1961, VM Dandekar and N Rath assessment of poverty in India in
1971, Task force of 1979, under Algah, Expert group 1993 (Lakdawala) ,Expert
Group 2005 (Tendulkar) all these committees assessed the condition of the poor
and set different levels of BPL at different time period, currently the Below
Poverty Line (BPL) level is set at those who earn Rs 1.8 lakh per year. As can be
seen this is a very old figure which is not at all apt for today’s world but the current
NDA is still following the Tendulkar threshold, whereas the IMF recommends a
new figure whereby many could be added in the BPL line.

One of the major participants of the BPL is the migrant labours, this labour force is
the backbone of the Indian Economy, the buildings that we live in or the highway
where our cars travel or even the same car by which we travel all are made by such
labourers .The 2017–18 labour force survey counts 415 million informal workers
in India, 90 per cent of the total workforce, and 28 million rural-to-urban workers
4
Jha, M. K. (2012). State, space and political subjects: A case of special economic zones. The Indian Journal of
Social Work, 73(2), 157–176.
5
Drèze, J., & Khera, R. (2016). Recent social security initiatives in India (pp. 4-5). Retrieved from
https://ssrn.com/abstract=2800699 or http://dx.doi.org/10.2139/ssrn.2800699
— consisting of small farmers, labourers, shepherds, fisherfolk, weavers and
artisans, forest gatherers, food processors, construction labourers and tradesmen,
domestic workers, manufacturing workers (factories, workshops, homes), street
vendors, transport workers and waste pickers (Chen, 2020). And the lockdown
brought the biggest wrath for such labourers and the informal sector as a whole.

The migrant story

Deepak Kumar a 40 year old could be seen walking on his barefoot to his home
state, Odisha from Mumbai giving interviews how he does not have anything to
eat, how he has to feed a family of 4 and he doesn’t have any job this stories were
part of the daily news bulletins. The migrant labour economy had faced the
harshest of effects of lockdown. The whole of India’s economy is dependent upon
such mobile informal labor sector, approx 400 millions of them are being pushed
to poverty due to the lockdown, they are on the verge of ending their savings and
this is 90% of India’s workforce. 6 The whole idea behind the lockdown was the
social distancing so that the virus could not travel from one place to the other but
with the case of migrants the effect was opposite the migrant when travelling
brought the virus along with them to village, the rural India which didn’t had a
direct contact with the virus but thanks to the lockdown measures they also had to
face the virus upfront. The intial figures of such a move were that the 34% of all
the covid cases in April 2020 were from the districts where the in-migration of
labour was high. According to estimates by Research and Information System for
Developing Countries and based on NSSO data, 4–6 million people are waiting to
return to Uttar Pradesh, 1.8–2.8 million to Bihar, 700,000–1 million to Rajasthan
and 600,000–900,000 to Madhya Pradesh (Singh & Magazine, 2020). This is close
to 8 million people.7 Even when they did returned to their home state the condition
were not at all ideal for them like for example The village head of Saraiya block in
Muzaffarpur district of Bihar describes, ‘in my village school building, 14 migrants
have been quarantined for last three days, but the building has no window, toilet,
door or bed’ (Tewary, 2020).8
6
Chen, M. (2020). To die from hunger or the virus. An all too real dilemma for the poor in India and (elsewhere).
Retrieved from https://www.wider.unu.edu/publication/diehunger-or-virus
7
Singh, S., & Magazine, A. (2020). Explained: Indian migrants, across India. Retrieved from,
https://indianexpress.com/article/explained/coronavirus-india-lockdown-migranworkers-mass-exodus-6348834
8
Tewary, A. (2020, April 8). Coronavirus: Migrant workers slip out of Bihar quarantine shelters at night, return by
day. Retrieved from https://www.thehindu.com/news/ national/coronavirus-lockdown-many-quarantined-bihar-
villagers-missing-fromcentres-at-night/article31291139.ece
The effects could be seen economically too, all the infrastructure projects were
stopped, people had money to build houses, visit salons, or buy cars but no one
was there to build them. The effect was also that whatever such labourers earn in
the city a part of it was given to rural places but now since they were only uprooted
no such cash flow could be seen. So the rural economy was also affected due to
this.

The government did take a step to stop the blood flow but it was not that effective.

The government’s response and why it failed?

The various money that was distributed among the poor through policies schemes
as a relief for COVID-19 is 30 million poor people have been assisted through
transfers amounting to `312,350 million (USD 4,129 million) under Prime
Minister’s Poor Relief Scheme (PMGKY) (All India Radio News, 2020); 100,000
million (USD 1,322 million) has been transferred to 200 million women holding
special JanDhan accounts (`500 per person), 14,050 million (USD 186 million)
was provided under welfare pension schemes to 28.2 million people, 161,460
million (USD 2,134 million) to 80 million registered farmers under cash income
support scheme, PM-KISAN, and `34,970 million (USD 462 million) worth of
financial support to 21.7 million building and construction workers. Under the
PMGKY, 392.7 million people received free food grains, and 26.6 million LPG
cylinders were distributed under the PMUY scheme (All India Radio News, 2020).
This was the first response of the government for the migrant situation but the first
response was amounting 0.2% of India’s GDP (IMF Policy Tracker), so the relief
was breadcrumbs as compared to the mountain of problem that the migrant sector
was facing. But the issue was that the amount that was given to migrants was
already what they were going to get paid even if pandemic did not occur so the
government did not spend some extra amount to tackle the pandemic problem,
Now critics argue that government should have considered the factors that the
migrants are not going to get their jobs back, their income was at all time lowest,
they were uprooted they had to start from ground zero when they moved back to
their villages back. The very famous Atmanirbhar Bharat amounted to only 2.7 per
cent of the GDP as relief for businesses and not more than 1.1 per cent of the GDP
as a safety net for poor households, migrants and farmers (IMF, 2020), so even the
new grand scheme of Atmanirbhar Bharat was fell short of expectations.9

Conclusion

The government should take progressive step towards taking care of its informal
sector; the government should not be selective at selecting who will be getting the
relief. As the informal sector is where people who are illiterate also exist they
would not be able to take full advantage of the reliefs provided by the government,
so measures should be taken to make them aware. And they should be given
confidence to return to cities when the situation becomes normal. So what is
happening now is migrants are afraid to come to cities because they realized the
fact that the job security is zero in cities and they could be uprooted in one second
in city, whereas in villages they have something which is somewhat permanent.
They should be provided incentives.

9
The Economic Times. (2020, March 27). FM Nirmala Sitharaman announces Rs.1.7 lakh crore relief package for
poor. Retrieved 10 May from https://economictimes.indiatimes. com/news/economy/policy/fm-nirmala-
sitharaman-announces-rs-1-7-lakh-crorerelief-package-for-poor/articleshow/74825054.com