COVID-19: Emergence, Spread and Its Impact on the Indian Economy and Migrant Workers

Abstract

This study examines the impact of the COVID-19 pandemic and the related nationwide lockdown on the Indian economy, particularly on food systems. It also takes up an important issue of millions of migrant workers in India who seem to have suffered the most during this period. The loss of their livelihood, incomes, and food insecurity are captured through a survey of 2917 migrant workers in six different states of India. At the end, the study gives recommendations on how to broaden the support for migrant workers nationwide.Due to the pandemic-induced lockdown, the Indian economy contracted 24 percent in the first quarter of the financial year (FY) 2020-21 (April-June). The worst affected sectors were construction, trade and hotel and other services, and manufacturing. Consequently, the unemployment rate surged to 23.5 percent in April 2020. Given the easing of lockdown and measures taken by the government in the wake of the first wave of the pandemic, the economic growth revived to -7.5 percent in the second quarter of FY 2020-21. The food processing industry particularly manufacture of grain milling products, dairy products and animal and vegetable oil, were resilient during the lockdown. However, the pandemic adversely impacted the processing and preservation of meat, fruits and vegetables. Notably, the agricultural sector is the only sector that recorded a positive growth rate of 3.4 percent during the first two quarters of FY 2020-21. Nevertheless, the disruption of the agri-food supply chain, particularly during the initial period of the lockdown, pushed food inflation from 8.8 percent in March 2020 to 11.7 percent in April 2020, but it came down to 3.4 percent by the end of the third quarter (December) of FY 2020-21.The unprecedented migrant crisis was one of the major catastrophes that emerged during the pandemic. The sudden imposition of the lockdown had a severe impact not only on employment but consequently on the earnings and savings of the migrants once they reached their villages. At their native place, with no proper employment opportunities, the household income of migrants fell by 85 percent during June-August 2020, as per the survey findings. With the revival of economic activities post-lockdown, we found that 63.5 percent of migrants have returned to the destination areas by February 2021, while 36.5 percent were still in their villages at their native places. Although the migrant’s household income has increased after remigration, there is still a contraction of 7.7 percent relative to the pre-lockdown level. The household income of the migrants who are still at their native place post-lockdown contracted more than 82 percent compared to pre-lockdown.To revive the economy and provide support to vulnerable populations, the central government announced a series of packages. These included an additional quantity of subsidised food-grains under the Public Distribution System (PDS), cash transfers through Jan Dhan Yojana, free gas supply under the Ujjwala scheme, an ex-gratia to widow/senior citizen as well as income transfer to farmers under PM-Kisan. Overall, our survey showed 84.7 percent of the migrants had access to subsidised cereals under PDS, while the percentage receiving pulses was much lower at 12 percent during November-December 2020. Moreover, only 7.7 percent of migrants in their native place reported being engaged in Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) or any other public work. The demand-driven skill training under GKRY reached only 1.4 percent of migrants at their native place in our survey. Many workers reported a fall in the quality of food consumed during the lockdown and post-lockdown compared to the pre-lockdown level. With no access to relief measures and entitlements, a quick recovery of the migrant workers seems grim.