Rural India is plunged into debt while COVID-19 Reuters eliminates the work

By Aftab Ahmed and Saurabh Sharma

LUCKNOW, India – Asha Devik doesn’t remember how many meals she skipped while struggling to feed her seven-year-old family in a remote corner of northern India, where the novel coronavirus confuses old issues of rural debt and poverty.

Devik, 35, had to mortgage his land in exchange for a loan of 20,000 rupees ($ 270) and within six months, as he ran out of money, stopped buying milk, halved his use of cooking oil and could only pay lentils every 10 days. . .

With her construction worker’s husband out of work, she is deepening debts to deal with.

“Sometimes I go to bed hungry. I think I went to bed at least twice last week, but I don’t remember,” Devik told Reuters as he wiped away tears with his wireless award outside the mud house in his village in Uttar. Pradesh state.

Prime Minister Narendra Modi’s government has promised free food for the poor, but the ration is limited and not enough for the family, Devi said.

The coronavirus and the blockades to stop it last year threw millions of people out of jobs in cities and towns, and forced them to return to their hometowns, and growing debt.

Interviews with 75 households in the eight most populous states in India have shown that the average household income has fallen by 75%. Nearly two-thirds of households have taken on debt.

Devi’s husband worked in construction in the most prosperous situation in northwestern Punjab, which kept the family afloat. Now the job is gone and he has returned home and is making an effort to find a job.

Like others who have lost their jobs, they gather around a brick kiln every day to work near their hometown.

Essential monthly expenditure of rural families in India https://graphics.reuters.com/HEALTH-CORONAVIRUS/INDIA-RURAL/xklpyxqkdvg/chart.png

BACK RECOVERY

High rural debt and low incomes will prevent any economic recovery that the government is trying to create, and will save economists and private investment for longer than expected by economists.

“It will have a big impact and prolong the recovery process. Both private consumption and investment will be harmed. There is merit in finding ways to put money in people’s hands,” said NR Bhanumurthy, economist and vice-chancellor of Bengaluru. BR Ambedkar School of Economics based.

India’s gross domestic product recorded 7.3% in the year ended 31 March. The government has forecast 10.5% growth for 2021/2022, but a second wave of the pandemic has broken expectations and several economists have cut their forecasts.

The poor have been hit hard above all else.

Reuters research has shown that most of the 75 homes in the Uttar Pradesh cluster, totaling 518 people, have taken on a total debt of Rs 6.12 crore ($ 82,250), of which more than 80% remain homeless.

Debt has increased threefold since the pandemic in March 2020, roughly half of which has come out in the last six months.

With no jobs or earning bread, the accumulated monthly income of 75 households has dropped from about 220,000 rupees ($ 2,960) to 815,000 rupees ($ 10,960) before the pandemic.

“Almost everyone in this country is in debt … unemployment is the biggest problem,” said 55-year-old Komal Prasad, a former Gauriya leader, on a cluster farm with a population of more than 2,000.

Only about 30% of the population of Gauriya was looking for work or looking for work, much less than before, citizens said.

Juggi Lal, a 35-year-old farmer, said she was trying to buy medicines for her disabled husband because he was out of work and owed 60,000 rupees ($ 806) to a treasurer.

“I wake up every morning thinking about what job I’m going to get, how am I going to spend the day?”

The rural unemployment rate, about 6% before the pandemic, rose to 8.75% in June, according to the Mumbai-based Center for Economic Monitoring (CMIE) in India.

India Rural Unemployment Rate https://graphics.reuters.com/HEALTH-CORONAVIRUS/INDIA-RURAL/qmyvmdbkbpr/chart.png

EFFECT OF ERROR

The mix of lower incomes, higher debt and rising base prices is reducing demand in rural areas where two-thirds of Indians live.

Sellers say the sale of biscuits, tea and lentils to auto parts has been a success. Some have closed stores that have run their families for generations.

43-year-old Gosh Mohammed used to sell 8,000 rupees ($ 107) a day before the pandemic. It is now down 1,000 rupees ($ 13.5) a day.

He has taken a 60,000 rupee worth of goods from a wholesaler as credit, but has been unable to pay for six months.

“I never took the merchandise on credit because buying money gets more discounts,” Mohammed said.

“Now, I think I’m going to have to close my store because I’ve stopped giving credit to wholesalers and I’ve sold goods and the money isn’t going to be returned.”

($ 1 = 74,3600 Indian rupee)