Rural India sinks more into debt while COVID eliminates work | News of coronavirus pandemic

Asha Devi does not remember how many meals she skipped while struggling to feed her family of seven in a far corner of northern India where the new coronavirus exacerbates old rural debt and poverty problems.

Devi, 35, had to borrow his land for a loan of 20,000 rupees ($ 270) and six months later, after the money ran out, he stopped buying milk, halved his use of olive oil. cooks and can only pay for lentils once every 10 days.

With her construction worker’s husband out of work, she is on the verge of delving into debt to move on.

“Sometimes you want to go hungry.” Last week, I thought I went to bed hungry at least twice, but I don’t remember it, ”Devi told Reuters news agency as she wiped away the tears with her sari threaded out of her mud house in his country in the state of Uttar Pradesh.

Devi said Prime Minister Narendra Modi’s government has promised to provide free food grains to the poor, but rations are limited and not enough for the family.

The coronavirus and a blockade destined to stop it last year have seen millions of people driven from jobs in cities and towns and forced to return to their home countries, with ever-increasing levels of debt.

Interviews with 75 families in a group of eight countries in India’s most populous state show that household incomes have fallen by almost 75 per cent on average. Nearly two-thirds of households have taken on debt.

Devi’s husband had a construction job in the more prosperous state of Punjab in the northwest, which kept the family going. Now the work is gone and he is returning home and struggling to find work.

Others like those who lost their jobs crowded each day around a brick kiln near their village hoping to work.

A farmer feeds an iceberg lettuce to his buffalo during a 21-day shutdown across the country to slow the spread of coronavirus disease, in Bhuinj village in Satara district, Maharashtra [File: Rajendra Jadhav/Reuters]

Heavy debt and a low income in the countryside will prevent any economic recovery that the government is trying to make and even save private savings and investment for longer than expected, economists say.

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

India’s gross domestic product (GDP) fell by a record 7.3 per cent in the financial year which ended on 31 March. The government has forecast 10.5 percent growth for 2021-22 but a second wave of pandemic has dashed hopes and many economists have cut their forecasts.

The poor were mostly hit hard.

The Reuters survey showed most of the 75 families in the Uttar Pradesh cluster, together of 518 people, had taken on a total debt of 6.12 million rupees ($ 82,250), more than 80 per cent of which remains without service, homeowners said.

Lending has increased threefold since the pandemic hit in March 2020 and about half of that has been triggered in the last six months, the survey found.

Without employment or sick of bread-winners, the cumulative monthly income of the 75 families dropped to about 220,000 rupees ($ 2,960) from 815,000 rupees ($ 10,960) before the pandemic.

“Almost everyone is in debt in this country … unemployment is the biggest problem,” said Komal Prasad, 55, a former head of Gauriya, a cluster village with a population of just over 2,000.

Only about 30 per cent of the people in Gauriya had a job or were looking for work, much less than before, the villagers say.

Juggi Lal, a 35-year-old farmer, said she was struggling to buy medicine for her disabled husband because there was no work and owed 60,000 rupees ($ 806) to a lender.

“Every morning I wake up thinking about what work I’m going to do, how am I going to spend the day?”

The rural unemployment rate, which was hovering around 6 percent before the pandemic, had risen to 8.75 percent in June, according to the Indian Economy Monitoring Center (CMIE), based in Mumbai.

Manorami Rawat, 35, works in an oven to extract peppermint oil in the village of Dalipur in northern Uttar Pradesh. [File: Saurabh Sharma/Reuters]

The mix of lower incomes, higher debts and rising prices of commodity products is dampening demand in the countryside where two-thirds of Indians live.

Sales say sales of everything from cookies, tea and lentils to auto parts. Some have closed businesses that their families have run for generations.

Gosh Mohammed, 43, sold up to 8,000 rupees ($ 107) worth of products before the pandemic. Now it has dropped to 1000 rupees ($ 13.5) per day.

He took 60,000 rupees ($ 800) of merchandise from a credit wholesaler but was unable to pay it for six months.

“I’ve never had to take goods on credit because buying with money makes us more of a discount,” Mohammed said.

“Now I think I will have to close my store since the wholesalers have stopped giving me credit and I have sold the goods on credit and the money is not likely to return.”

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