Daily Editorial Analysis for 7th July 2020

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  5. Daily Editorial Analysis for 7th July 2020

Rolling back the induced livelihood shock

Paper:  II & III


  • General Studies- II: Governance, Constitution, Polity, Social Justice and International relations
  • General Studies-III: Technology, Economic Development, Bio diversity, Environment, Security and Disaster Management


  • For most regions across the country, the long lockdown has just got over.
  • As the “unlocking” begins, it is becoming increasingly apparent how the Indian state had chosen its sides and revealed its elitist bias during one of the most stringently enforced lockdowns worldwide.
  • Several news reports and surveys on the plight of India’s less-privileged workforce during the lockdown have highlighted the massive scale of falling incomes and loss of means of livelihood.


  • India’s poverty line has been based on unrealistically low thresholds leading to conservative poverty numbers. Irregular updating of official poverty lines and unavailability of data on consumption expenditure from National Sample Surveys in recent years have added to the ambiguity around poverty estimation in India.
  • According to the household consumption expenditure reported in the Periodic Labour Force Survey (PLFS), 2017-18 and applying State-specific poverty lines (used by the erstwhile Planning Commission in 2011 based on the Tendulkar Committee recommendations, adjusted with current price indices), about 42% or around 56 crore people were ‘officially’ poor before the lockdown was announced.


  • The pandemic and the stringently enforced lockdown have had a devastating impact on India’s labour class.
  • There have been reports of a massive scale of falling incomes and loss of means of livelihood. The livelihood shock to such a large proportion of the population is unprecedented in the nation’s history.
  • There could be severe implications with increasing hunger-related deaths and destitution, leading to social unrest and crime.
  • Around 20 crore people were within a narrow band of 20% above the poverty line implying that these people were only a few hundred rupees over the poverty line threshold. A modest dip in earnings — and hence a fall in consumption spending — would push a majority of them into poverty and hunger.
  • The lockdown seems to have pushed such vulnerable sections into poverty.
  • The extrapolation of the PLFS data extrapolated for the year 2020 suggests that about an additional 40 crore people were pushed below the poverty line due to the lockdown.
  • Around 12 crores of this lockdown-induced newly poor are in urban areas and another 28-crore people in rural areas.
  • Those who were already poor are going to suffer a further worsening in their quality of life, a phenomenon known as poverty deepening.
  • Even before the lockdown, around 16% of the population had per capita consumption expenditure of about a third of the poverty line.
  • The lockdown would have pushed the already poor to extreme poverty.

Destabilization of the urban economy:

  • Massive reverse migration flows out of the urban informal sector will hinder the economic recovery in the post-lockdown scenario.
  • The second economic stimulus package announces only a token increase of the National Rural Employment Guarantee Act (NREGA) wage by Rs. 20 (Rs. 182 to Rs. 202).
  • The demand for work is anticipated to increase by 25% with the reverse migration-fueled increase in rural labour supply. The additional grant made to the MGNREGS seems insufficient.

Policy failure:

  • The article argues that the neo-liberal growth that India has experienced since the 1990s has been largely through the exploitation of the labouring class.
  • The economy grew by paying less to workers and allowing surplus to accumulate in the hands of the owners of the means of production, with the expectation that this would be reinvested.
  • This model seems to have made the labouring class increasingly vulnerable, weakening their collective bargaining power, pushing them away from their native towns out of desperation, forcing them to accept any wage that is offered to them, making them live in conditions which take away their sense of dignity, and curtailing any social security benefit that could help them survive in times of difficulties.

Way forward:

  • The article argues for specific policy measures to reverse the lockdown-created shock and stop it from snowballing into chronic poverty.

Rural specific schemes:

  • A revamped, expanded NREGA needs to be made the fulcrum of the government’s rural interventions.
  • The revamped scheme would require providing 90 million workers guaranteed employment of 20 days of work/month for at least the next six months. This would entail an additional financial stimulus of Rs. 1.6-lakh crore.

Focussing on equity:

  • Recent experience with respect to government schemes shows the inherent challenge of the exclusion of marginalised communities at the lowest strata of the hierarchy.
  • Though universalisation of the Public Distribution System may be an ideal objective, there is a need for better equity focus in the implementation of such schemes.
  • This would involve identification of the most vulnerable and including them into the programme before expanding it to the relatively better-off.

Stabilising urban economy :

  • Given the magnitude of the destabilisation in the urban economy, an urban employment guarantee programme becomes a dire necessity to stabilise the urban economy.
  • A ‘direct’ employment programme implemented through municipal corporations could be introduced to guarantee 20 days of work. The wages could be fixed with a 30% premium over prevalent MNREGA benchmark average wage in the State.
  • This programme can be used to develop key social infrastructure in urban areas including slum development, drinking water supply, toilet construction, parks and common areas, urban afforestation and social forestry. Such public works programmes can make a major difference in both the condition of public utilities and absorbing the spurt in demand for work in towns and smaller cities.

Reorienting policies:

There is a need to alter the course of economic progress and reorient development programmes based on equity and sustainable development.

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