84% of households witness drop in income; well to do families suffered least: Study

Prashasti Awasthi Mumbai | Updated on May 15, 2020

Around 84 per cent of Indian households witness a plunge in their income since last month due to prolonged lockdown brought in by the novel coronavirus, a study by Chicago Booth's Rustandy Centre for Social Sector Innovation (CBRCSSI) revealed, Bloomberg report.

CBRCSSI analysed data from the Centre for Monitoring Indian Economy (CMIE) Pvt., gathered through surveys covering about 5,800 homes across 27 Indian states in April.

The researchers found out that rural areas and hinterlands were severely affected by the lockdown and the coronavirus spread has little to do with their economic turmoil.

"Rather, income-per-capita before the lockdown, lockdown severity, and the effectiveness of the delivery of aid are likely contributors," they wrote.

The study also corroborates the previous data released by the CMIE and others, which disclosed that more than 100 million Indians became jobless after March 25 lockdown. This happened when Prime Minister Narendra Modi paused the production and sale of goods and services in the country, except the essential items.

According to the study mentioned in the Bloomberg report, the worst-hit states were Tripura, Chhattisgarh, Bihar, Jharkhand, and Haryana.

The study's authors are Marianne Bertrand, professor of economics at the University of Chicago Booth School of Business, Kaushik Krishnan, chief economist at CMIE, and Heather Schofield, an assistant professor at the Perelman School of Medicine and the Wharton School.

The proportion of households reporting income loss:

About 84 per cent of households with incomes of as much as ₹3,801 ($50)

About 92 per cent earning between ₹3,801 to ₹5,914

About 93 per cent earning between ₹5,914 to ₹8,142

About 85 per cent earning between ₹8,142 and ₹12,374

About 66 per cent earning between ₹12,374 and ₹101,902

The researchers also found that the well to do households witnessed the lowest declines due to stable and salaried jobs, and they continued their work by working from home.

The smallest earners perhaps have occupations that continued despite the lockdown -- such as farming, or food vendors -- the authors said.

"The remaining households appear to be exposed to substantial job losses that have not been buffered by additional transfers," they added.

Published on May 15, 2020

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