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Covid-19 could fundamentally change India’s political economy: analysis


India has announced a 21-day national shutdown, starting March 25, to prevent the spread of the Covid-19 pandemic in the country. Except for essential services like food supplies, healthcare, banking and law enforcement, everything is closed during this period. This also means that a large part of the workforce of over 400 million people in India will not be able to access the job market and make a profit. This unforeseen calamity has the potential to fundamentally change the landscape of India’s political economy.

Although India has fared poorly in terms of generating “good jobs” for a large majority of its workforce, its informal markets have kept large numbers of workers in a kind of low-level equilibrium trap. At no time has India imposed restrictions on rural-urban or interstate labor mobility, which is not uncommon in countries in East and Southeast Asia. Even unskilled workers travel thousands of miles to find employment in India. Working in the informal sector has also limited collective “class action” in favor of a common set of demands, despite having to live unequally in almost all aspects of life, including the ability to survive disease. This is why conventional unions have been fighting to have a significant impact on politics or politics for a long time.

All of this could change once this crisis is over, as, for the first time, this barefoot and completely unprotected job has faced a direct, state-inflicted blow to the ability to sell its workforce. Even when this crisis ends, and hopefully end sooner rather than later, memories of this shock and the economic pain associated with it will remain ingrained.

The Indian economy has changed in many significant ways, especially in the past three “post-reform” decades. One of the most important facets of this transformation has been the shift away from agriculture to non-agricultural sectors. In terms of GDP share, agriculture now represents less than 15% of total economic output. This figure was 27% in 1990. However, agriculture still represents a significant part of the workforce. According to the Periodic Survey of the Workforce (PLFS) 2017-18, more than 40% of workers were employed directly or indirectly in agriculture. To be sure, these headline numbers on income and employment shares could be misleading. Even in villages and among households employed in agriculture, non-farm income is actually a significant and growing part of overall income.

This is confirmed by household-level income data and other methods, such as village-based studies. An example of this is the unique five-decade-long study of the village of Palanpur in the Moradabad district of Uttar Pradesh. In their book How Lives Change: Palanpur, India and Development Economics, Himanshu, Peter Lanjouw and Nicholas Stern use the data at the village level to show that the share of cultivation in total household income fell from more than 60% in the 1970s to just one. third for 2008-09. The share of non-farm income, on the other hand, increased from around 10% to almost 50% during this period.

The importance of non-agricultural work cannot be explained only by its share of total income. The ability to migrate and seek non-farm work outside of villages has also allowed workers to escape the stigma associated with certain types of manual labor within the village itself. For example, the upper caste workers of Thakur in Palanpur were willing to unload the railway cars in a neighboring city for a living, the kind of work they would never do in Palanpur, so that it would not degrade their social position in the caste. higher. The short point is that migration related to non-farm work has not only increased income; It has also opened new avenues of work for large numbers of workers. The closure of this market, therefore, is a double whammy for daily wage workers.

It must be remembered that, even with all the migration and informal work, the vast majority of Indians can barely make ends meet. Almost half of the total consumption expenditure of the average Indians was spent on food in 2011-12. This proportion is significantly higher for the lower half of the population.

Because the government did not release the results of the 2017-18 Consumer Expenditure Survey (CES) conducted by the National Statistical Office (NSO), we don’t know what these numbers are today.

Such a high proportion of consumer spending on food also means that large numbers of workers lead a word of mouth at home, and it will be very difficult to even get two meals a day if their daily work is interrupted. Although India has a food security program, which is expected to cover two thirds of the population, it is still a progressive work to make the rights portable. This means that short-term migrant workers are unlikely to have access to their benefits. Also, for a migrant worker living outside their home, food is not the only necessary expense. Managing things like rent payment is an equally important problem in the absence of a regular workflow. Millions of workers must be having a very difficult time right now. Anecdotal reports of thousands of workers walking home to their homes hundreds, even thousands, of miles away confirm this.

Without a doubt, it can always be argued that the current economic pain due to the closure is not unwarranted. After all, if the pandemic begins to infect people at a widespread rate in a country like India, the consequences can be catastrophic. However, what is also true is that there is a fundamental asymmetry in all this exchange. While the benefits of a blockade that prevents the spread of infection would be the same for everyone, the costs will be disproportionately higher for the poor, who, unlike those in a better situation, do not have the luxury of working from home or a pool of savings enough to drain while you don’t win. In this case, one could even say that the disease has been brought home by the wealthy, since it originated in a foreign country, and the poor had absolutely no role to play in its spread.

It should also be reiterated that, under normal circumstances, the poor are actually more vulnerable to death from disease, as they cannot take advantage of treatment or pay adequate diets to recover from their ailments. A 2015 story published in the Hindustan Times had cited research at the All India Institute of Medical Sciences in Delhi to show that 50% of patients with serious head injuries died due to extreme poverty as their families did not have the economic means to guarantee an adequate diet or nursing facilities. The AIIMS study is not a unique case. Research based on data from the Indian Human Development Survey (IHDS) shows that the poorest Indians are almost twice as likely to die compared to the wealthiest, even when they are healthy. This triples when there is an illness involved. There is another way to view these statistics. For a person belonging to the poorest 20% of the population, the chances of dying increase by a multiple of 1.9 if they are sick, while this increases only 1.2 times when the person belongs to the richest 20% of the population.

The numbers cited above, representing the associated probability of dying with and without morbidity, capture the macabre reality of the Indian economy. A large part of our population has lived a life by word of mouth while hoping they don’t get sick or just live their diseases when they do.

Why have people agreed to live in such harsh conditions? There are two possible reasons. First, this crisis has never manifested itself at the macro level. So there has been no macro anger or response to it. To give a crude example, one could take the cases of hundreds of poor children who die from various forms of encephalitis in a matter of days in the states of Bihar and Uttar Pradesh. Deaths in such episodes have often reached significantly higher numbers than the number of deaths due to the current pandemic in many countries. However, such cases have not led to macro-level upheavals that demand better health services at affordable prices for the poor.

The second and most important reason is that while the state did little to help those affected by these problems, it did not impose an additional economic burden on the poor by imposing a blockade and disrupting the normal economy. This probably created a situation where individual effort was focused on saving themselves from what are really macro problems. Given the asymmetry between the costs and benefits of the current blockade, the poor could, for the first time, see systemic inequalities as a problem at the macro level and seek state resources.

While there is little clarity about when the current crisis will end, and whether we will see a second or third wave of the outbreak, such fears will clearly remain. It is not very difficult to argue that a change in policy regime could go a long way in isolating the poor from the terribly high economic costs of economic disruption due to such future outbreaks. Examples of this could be provisions to increase income / food transfer in such emergencies, significantly increasing the public health infrastructure; both in terms of quantity and quality to protect the poor during such crises, and even guarantee some form of payment to daily wage workers during other illnesses that prevent them from working.

If a political party were to drive such changes, it could actually be quite successful in mobilizing a large part of the poor behind these demands. While the poor have little to say in shaping India’s intellectual or public discourse, they do play an important role in deciding political outcomes.

Whether this happens or not depends on how the political parties, both in power and in the Opposition, both national and regional, approach these issues with a clearly defined set of demands and massive reach. We will see a lot of politicking about how governments handle the current crisis both in India and abroad. However, it remains to be seen whether political parties in India decide to use the current pandemic to demand a redesign of the political economy’s pro-poor alignments.

(Roshan Kishore is HT’s data and political economy editor, who is currently on a gap year at the Center for Advanced Study in India, University of Pennsylvania. This article was first published in the online journal of ALMOST, India in Transition).

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