State Lockdowns and a Flattening of the Economic Well-Being Curve

A recent survey on households in UP and Odisha paints a stark picture on the economic loss imposed by a lockdown.

Lockdowns have become the flavour of the season, with various Indian state governments enforcing them in a hurry in all shapes and sizes with even the slightest uptick in COVID-19 cases.

While the efficacy of these shorter lockdowns is still unclear, they may be flattening the wrong curve if one goes by the findings of a recent rapid telephone survey done by the National Council of Applied Economic Research (NCAER). They polled 2,068 households in Bargarh and  Dhenkanal districts in Odisha and Chandauli along with Firozabad in Uttar Pradesh (UP) during June 9-18 as part of their research in collaboration with Nossal Institute of Public Health at the University of Melbourne.

The survey looked at the impact on incomes, jobs, migration, availability of essentials, return to work, concern for neighbours, fears related to the virus and faith in the government.

The findings are very revealing.

The survey shows almost similar trends in both states with regard to severe impact on households relying on casual labour and self-employment in the non-agricultural segment as their main source of income. While disruption in income earning affected 40% of households, 11% had to change their occupation and 29% lost all their monthly income. A further 40% of households have reported some loss of income.

There was an astounding impact on the reduction of income affecting 80% of households, with Odisha showing a slightly higher figure. In UP, 88% of urban households and 73% of rural households were affected. In Odisha, there was not much difference between urban and rural households. The same two categories of casual labour and non-agricultural self-employed predictably suffered the maximum. Even farmers suffered losses, probably because of reduced demand for farm produce.

Farmers load paddy on a bullock-cart in a flood affected field in Morigaon district of Assam, Thursday, May 28, 2020. Photo: PTI

More than 50% of households coped with this economic shock by utilising savings or selling assets, with Odisha logging nearly 60%. Borrowing was more in UP compared to Odisha, where the sale of assets was the major coping mechanism with borrowing covering only 17% of the households. Reduced expenditure is reported in 35% of households in UP and only 5% in Odisha. The much-vaunted assistance from the government only reached 60% of households in Odisha and 46% in UP.

Nearly 30% of households, a little less in UP and more in Odisha, had difficulties in accessing supplies. According to the survey, 25% of households in Odisha faced cooking fuel shortages. On resumption of economic activity, 75% households in Odisha and 46% in UP returned to work. Under the casual labour and self-employed in the non-agriculture segment, the worst affected, it was 53% households in UP and 73% in Odisha.

About people’s prognosis about the resumption of pre-lockdown normalcy, UP is more pessimistic with 46% thinking that it would deteriorate further, compared to 20% in Odisha. 36% of the respondents in Odisha and 14% in UP do not visualise any change in their financial situation. Similar pessimism is found in expectation in of finding a job in a six-month period – UP scores a low with 33% households compared to 53% in Odisha.

In addition to this, 15% of the households in Odisha and 26% in UP think that restoration of normalcy will take up to a year.

On healthcare, almost 80% of respondents in both states have deep concern on lack of access, 85% in terms of arranging money for treatment and 80% about access to transportation. Interestingly, 85% of households feel that the police may stop them from reaching a health facility. But the saving grace is amid all these gloomy and sinking feelings, 81% of households in Odisha are concerned about the wellbeing of their neighbours as against 41% in UP.

Resorting frequently to a lockdown may be showing off implementation of a grand idea or an attempt to prove that the government tried their best. But it does not indicate a sensible plan to either handle COVID-19 or mitigating the survival problem of job, income and access to healthcare. A plan of identification and contact tracing with the smallest quarantine zoning would not only have yielded better results in managing the pandemic, but would have helped in softening the economic impact on people.

If there is no recognition of these findings, instead of flattening the COVID-19 curve, India’s large population percentage which lives under the poverty line or on the edge of it will be flattened.

Satya Mohanty is a former secretary to the government of India.