How the COVID-19 lockdown is affecting India’s households

Amid a gradual reopening of its economy, India has extended its nationwide lockdown in containment zones – areas where people have tested positive for COVID-19—through June 30. 

Several people wearing face masks walk through an outdoor market carrying bags of groceries in India

The wisdom of even a phased reopening in select sectors such as malls, restaurants and markets selling nonessential goods and domestic train and air travel is being questioned as the number of COVID-19 cases and deaths continues to climb. As of June 8, India was seventh on the list of countries with the most infections with 258,090 positive cases and 7,263 deaths.

The economic distress in India caused by the lockdown is dire. Nearly 84% of Indian households are seeing decreases in income since the lockdown began, according to a recent study by experts at the University of Pennsylvania, University of Chicago and the Mumbai-based Centre for Monitoring the Indian Economy, titled “How Are Indian Households Coping Under the Covid-19 Lockdown? 8 Key Findings.”

The study found a “sharp and broad negative impact on household income” as the pandemic diminished their staying capacity. Nearly a third of all households will not be able to survive beyond a week without additional assistance, it stated. That harsh statistic finds corroboration in the unemployment rate, which had crossed 27% in early May. The jobless rate has since dropped to less than 24%.

How should India’s policy makers respond to the economic distress? “Direct and immediate transfers of food and cash are very high priority,” says Heather Schofield, assistant professor of medical ethics and health policy at the Perelman School of Medicine and a Wharton professor of business economics and public policy. “These transfers should be broad based and reach most of the income distribution, as it is clear that nearly everyone but the wealthiest have seen their incomes fall and are in need of additional resources to survive.”

Read more at Knowledge@Wharton.