I hope no one thinks that this note is premature. That the pandemic will end is certain; I sincerely hope we see the end of this pandemic and the unpleasant constraints it has imposed on all of us early and in any case no later than middle of May.
As of now everyone is preoccupied with the thought about the ways to contain the spread and minimize loss of life during the pandemic. As a result, it is likely that immediate post-pandemic period may see a self- congratulatory, complacent indolence.
There will be a need to minimize the pain the lockdown and other disruptions have introduced in the lives of people. I make an attempt to outline what would be needed to alleviate this pain as much as conditions permit.
I hope that the spread of the disease would be very limited and confined to the present COVID-19 hotspots that include Kasaragod in Kerala, Islampur in Maharashtra, and Bhilwara in Rajasthan.
These hotspots will face much greater distress and constraints in rebooting. My note is about those large number of rural locations that will be unaffected by the infection this season in terms of health effects but will suffer the economic pain imposed by the lockdown.
Sources of distress
I see four distinct sources of distress to rural India due to the pandemic. The first and the most articulated source of distress is the effect due to loss of employment and wages suffered by rural laborers who had migrated to affected urban destinations such as Delhi, Mumbai, Pune and Bengaluru.
The second source of distress is the loss of income arising out of impossibility or huge difficulty in marketing of farm and animal produce. The third source of distress lies in drying up of fund flow from the state and philanthropy sector to rural areas.
The final source of distress lies in the disruptions and movement restrictions imposed on the flow of agro-commodities needed for the next crop as well as the most likely disruptions in availability of bank credit to farmers.
Loss of migrant laborers’ income
The plight of migrants has been rudely thrust on the public attention due to the sudden manner in which the lockdown was announced, leaving no time for a smooth return to their homes.
Migrant labor earn much higher daily wages in urban centers compared to rural places, but also need to spend a great deal more on survival in urban centers. As a result, they take only a fraction of their earning back home.
Though the loss of income is real, the net effect on rural household economy is smaller. This is likely to be further mitigated by free food supply to rural households as well as enhanced MNREGA payments which have already been initiated in states like Uttar Pradesh (UP). Thus the immediate impact on incomes is cushioned to an extent.
In all probability, by the time things start returning to normal in major urban centers, kharif season would be about to start and the usual migration season would come to an end for a majority of Indian states.
Labor from Bihar and UP migrating towards Punjab would perhaps be able to undertake those journeys to reboot normalcy. For the rest, one whole earning season is gone and with that any hope of any cash surplus for repayment of family debts or for investing in farm and household enterprises. These would be the major blows to rural household economy in South Rajasthan, West Madhya Pradesh, Marathwada, Bundelkhand and a host of other regions.
Whether further pro-poor schemes for supporting a reboot of rural economy beyond the current economic packages would be feasible for the government remains to be seen. One possible positive fallout would be that a section of households supplying migrant labor would possibly choose to try and devise ways of enhancing their incomes in situ and delay or avoid migration effecting a change in the pattern of their lives.
Loss of income due to disrupted marketing channels
This loss is felt acutely and immediately now despite the assurances that agricultural marketing channels will remain open. There is a discontinuity. Fisherfolk around Mumbai have, for instance, lost their livelihoods to the lockdown as many of the landing centers have become hotspots and hence beyond reach.
First due to irresponsible rumors regarding chicken and eggs, and now due to these disruptions, poultry farmers have suffered a huge loss. Quite possibly, a trend towards greater reliance on vegetarian diets will produce a medium if not a long term depressing effect on poultry and animal farmers in general. A possible upward bleep may occur depending upon how quickly the markets for animal produce recover during the upcoming Ramadan month.
Horticulture producers have also experienced severe problems. This should have been the eagerly awaited launch of the Alphonso mango season and one sees no sign of it anywhere. Global trade is more or less at a standstill and hence export market for grape, pomegranate and mango seems to be in a big limbo.
Numerous snippets about farmers feeding produce to animals as they cannot take it to market have been published in the media. It is not clear whether these will recover any time soon. While the virus has created health issues in only 274 of the 800 districts, it has played havoc with the horticulture produce all over.
It is possible to argue that small horticulture producers producing vegetables will recover more quickly and the loss will mainly impose a burden on the better-off fruit plantation owners, but the effect is strongly negative. One may include here that the loss of livelihoods of people who provide services to functions such as marriage feasts, etc. is that such social spend would reduce drastically.
Drying up of fund flow to rural sector
The economic package of Rs 1.7 lakh crore announced for rural households is for supporting subsistence. Through the PM CARES fund and through direct interventions, a lot of philanthropy money is also going towards the health and treatment related aspects of COVID-19 as well as for supporting daily wage workers. A significant part of that is in kind in the form of grains or free gas cylinders, etc.
While this surely helps, it is going to be very dispersed across a large number of households. Further, for any single household, the support of the nature of subsistence can form only a small part of their incomes and cannot fully compensate the loss of income from the above two sources. As such it does not automatically lead to support to productive activities.
The real tragedy is that this fund flow will put such a strain on public exchequer that fund flow for schemes of land improvement, watershed development, desilting of ponds and nallahs, creation of water harvesting structures, new plantations, irrigation equipment, etc. which support expansion of production would be hit.
Private philanthropies too would face fund crunch as they have given for COVID-19 measures. The extent to which this would happen and the regions where it would happen would of course vary depending upon the political economy of states. As usual, the poor, dry land farmers would receive the short end of the stick while well connected powerful middle caste land-owning classes will claim and get the lion’s share.
Disruption in flow of farm inputs
To what extent marketing of seeds, fertilizers and plant protection materials as also farm equipment will be hit depends upon the length to which the lockdown and disruptions last, as well as, if not more, on the timing of onset and reliability of the monsoon. It is possibly too early to predict.
In summary, we do expect strong negative economic impact on rural households arising out of near complete failure of the migration season, on account of disruptions in marketing of fresh horticulture and animal husbandry produce and on account of the disruption in fund flow to schemes that help farmers improve their incomes.
Sanjiv Phansalkar is associated closely with Transform Rural India Foundation. He was earlier a faculty member at the Institute of Rural Management Anand (IRMA). Phansalkar is a fellow of the Indian Institute of Management (IIM) Ahmedabad. Views are personal.