Trying to start a new life is turning out to be difficult due to a collapse in demand. A ground report from Bihar.
Consumption of drugs has spiked to dangerous levels. So much so that cough syrup brands, sedative drugs like Netravet and an adhesive named Sunfix are household names
ARARIA/NEW DELHI :
Bergachi Chowk is a busy intersection, a short ride away from Araria town in northern Bihar, an impoverished hub of distress migration. Last summer, hundreds of thousands made an arduous journey back to their homes in this district on the India-Nepal border after India announced a stringent lockdown to control the spread of covid-19.
Mohammed Imran, 39, is one of the 10 million migrants who returned to their homes across India, as per an official estimate. On clear mornings, Imran can spot the mighty Himalayas from a distance, but in Araria there is little else to look forward to. The district is overwhelmingly rural; it is also among the most impoverished in India with extremely low levels of literacy (55%).
When the lockdown was announced, Imran suddenly found himself without a job—for two decades he had been working as a skilled embroiderer in different cities. Stuck in the Delhi suburb of Noida, Uttar Pradesh, Imran spent his meagre savings on food and rent. But compared to those who were forced to walk back or had to travel crammed like cattle on trucks, Imran was lucky to find a place on a train to Araria.
Idle since last June, he waited for normalcy to return. The pandemic was on the wane, but the factory that used to employ him did not recover from the economic shock. So, in January 2021, Imran took the plunge and started his own micro-business—a grocery store at the Bergachi crossing. He sold a tiny plot of land and invested ₹2,50,000 to set up shop. But with daily sales of around ₹3,000 Imran now makes about ₹250 a day—an amount lower than what a daily wager earns locally ( ₹300).
“It takes time to establish a business," Imran said. His voice lacked conviction. Nonetheless, Imran treated his new customers with care, smilingly attending to a little girl asking for chewing gum and reminding others that he never cheated on weight.
During a brief visit to Araria and Purnia districts in Bihar, this reporter met several migrant workers, many of whom were scarred by the lockdown and unwilling to return to the cities; and those who were eager to go back and were waiting for day jobs to be restored. The impact on household earnings was severe, with remittances drying up and wages and earnings from agriculture plummeting.
India’s GDP growth is likely to return to positive territory in the fourth quarter (2020-21), according to Niti Aayog and the rating agencies. But since the pandemic induced income losses were disproportionately borne by the poorest—according to a recent report from the Azim Premji University, the bottom 10% of India’s wage earners lost 30 percentage points more of their incomes than the top 10%—the situation in distress migration hotspots like Araria is far from normal.
Impact of slowdown
Imran’s predicament is shared by several others around Bergachi, which is seeing a mushrooming of new businesses trying to break even. For instance, 21-year-old Naser Siddiqui completed his graduation last year from Delhi University, but on the advice of his father, a contractor working on sewage projects, chose to return home instead of scouting for a job in the national capital.
His family invested ₹12,50,000, a minor fortune in Araria, to set up a garment store. But sales could not be more tepid. “My days are spent sitting around. An entire winter passed and so few here purchased new woollens," Siddiqui rued. “The newly opened shoe store (next door) is seeing so few customers that the owner drops in for a few hours in the evening and says, ‘It is better to fish in the river than run a shop in this godforsaken place’," he added.
India’s pandemic-hit economy is forecast to contract by 7.7% in 2020-21, the largest slide in over six decades, and its impact on the ground is telling. In January, Siddiqui’s store registered ₹20,000 in sales, about a fifth of what the grocery store run by Imran fetched. “It does not even pay for the rent and electricity, let alone my food and travel expenses," Siddiqui said.
“On most days my earnings are spent in offering tea and paan (betel leaves) to out-of-job friends who come to while away time," said 22-year-old Mohsin, another returned migrant who manages a tiny grocery store across the street.
Mohsin is yet to repay the ₹30,000 he borrowed to survive the lockdown in Bengaluru—where he worked as a painter—and to pay for the bus fare ( ₹12,000) to return home.
Mohsin also volunteered his insights into the slowdown. People are left with little cash and everyone is waiting for the maize harvest to begin in April. But despite the demand crunch, many who have returned are taking to self-employment by selling land, liquidating savings or borrowing from microlenders and informal sources.
“In our experience of operating at the ground level in rural and semi-urban areas across the country, the migrant labourers who have stayed back have started small enterprises such as grocery stores, tea stalls, fast food stalls, vegetable shops...and many of them have needed capital support to start their new ventures," said a spokesperson from Bandhan Bank, a leading micro-lender in eastern India.
In the October-December (2020) quarter, Bandhan’s Emerging Entrepreneurs Business loan portfolio, which includes microcredit, grew 32.3% year-on-year and 6.5% quarter-on-quarter to ₹53,050 crore.
According to the Economic Survey 2016-17, internal remittances contributed more than ₹1.5 trillion to household incomes and financed over 30% of consumption expenditure in remittance-receiving households in rural India. Among states, Bihar and Uttar Pradesh accounted for about half of all out-migrants in India.
The actual number of returning migrants will be at least double the official estimate (10 million), since over 60 million migrated for wage work to cities between 2004 and 2018 (as per periodic labour force surveys), said Santosh Kumar Mehrotra, professor at the Centre for Informal Sector and Labour Studies at Delhi’s Jawaharlal Nehru University. “These are the people who are now facing an extremely severe crisis," he added.
Over 79% of workers in India are employed in the informal sector but if one adds up those working without any contract in the formal sector, the number zooms past 90%. Formal worker’s wages were cut by 3.6% but informal workers witnessed a much sharper fall of 23% due to the pandemic, observed the International Labour Organization’s Global Wage Report 2020-21 released in December 2020.
Among rural males, work participation rate (WPR), or individuals working as a proportion of the working age population, fell sharply from 68% in December 2019 to 49% in April 2020, shows an analysis of survey data from the Centre for Monitoring Indian Economy by researchers at the Azim Premji University, Bengaluru. By December 2020, WPR bounced back to 65%, but the employment recovery was largely via increased informality—implying there was an increase in the proportion of self-employed and those dependent on casual wage work.
Many were following the footsteps of Imran, the embroidery worker who earned ₹15,000 per month pre-pandemic and is now self-employed, earning a fraction of his previous salary. Between December 2019 and August 2020, median incomes fell by a sharp 26% for all categories of workers, the researchers found.
In addition, rural wages in real terms contracted steadily across India between August and November 2020 (the latest month for which data is available), shows data from the labour bureau. Crop earnings were tepid despite agriculture being the only sector registering a respectable 3.4% growth in the year to March.
For instance, in northern Bihar where maize is the dominant cash crop, farmers sold their harvest between ₹900-1200 per quintal last year, a price drop of over 50% compared to 2019 levels, and significantly lower than the state-determined fair price of ₹1,850 per quintal.
“The economic slowdown which preceded the pandemic has increased the dependence on petty trade in Bihar due to lack of employment and a collapse in wages," said Himanshu, economist and columnist with Mint.
“In parts of Bihar where the distress is acute, people are selling land to set up small businesses. The situation is only slightly better elsewhere since the plunge in rural earnings is fairly widespread."
“The 7.7% contraction in GDP is an underestimate since it does not include the disproportionately severe impact on the informal sector. That will likely show up in the revised estimates of national income which will be released later," he added
Between despair and drugs
Last Friday in Bergachi, the only shop with a steady flow of customers was a newly-opened meat shop run by Abdul Subhan, a former mason and contractor who had worked in Noida.
It took Subhan 17 days to walk the 1,200 km to Araria. “At times I felt that I will not reach home alive," he said. The experience scarred him so deeply that he is unwilling to return and recover the money (over ₹3 lakh) that real estate companies owe him.
About 30km from Bergachi, on the highway to the Purnia town, this reporter met Mukarram, 23, who recalled his gruelling nine day walk to reach home. “I still get nightmares... At the local quarantine centre all I got was a towel, a steel plate and a glass," he said, adding, he did not receive the ₹5,000 cash support offered by the state government.
Mukarram said he has no plans to return. “I have already constructed a gumti (makeshift shop) to sell trinkets. I will ask my mother to take a loan (from a microfinance company) to start the shop," he said.
Close by was a tea shop run by Rajinder Das, 52, a seasoned migrant who mostly worked in Jammu as an agricultural labourer. “I will go back once the crop is ready for harvest," Das said. The tea shop which he started last year is not enough to feed his family—despite the fact that a kind owner waived the monthly rent.
Das also complained that together with his wife Likhri Devi, the couple worked for over a month in the rural jobs scheme last year. But they were yet to receive the ₹25,000 wage payment as a local middleman did not include their names in the official muster roll. More than 200 residents of Rampur village were duped this way, he alleged.
Mukarram insisted that I meet 30-year-old Dilip Poddar at the Rampur village since he has figured out a smart way to sell grocery items without investing in a physical store.
Every morning, Poddar rides around neighbouring villages in a second-hand bike fitted with a mike and laden with grocery items weighing over a quintal. “Every passing day the volume I sell on credit is increasing. People are cutting corners by consuming less of every item, from pulses and tea powder to soaps and detergents. And they are buying smaller packs," Poddar said.
But consumption of drugs has spiked to dangerous levels, several residents and shopkeepers said. So much so that cough syrup brands, sedative drugs like Netravet and an adhesive named Sunfix are household names. What began as a replacement for liquor—the state banned consumption and sale of alcohol in 2016—is now commonly used by 12-18-year-olds.
“A mix of factors like the liquor ban, joblessness, acute financial stress and distress migration has contributed to alarming levels of substance abuse in villages," said Ashish Ranjan, co-founder of Jan Jagaran Shakti Sangathan, a union of informal sector workers.
On my first morning at Araria, at a far end of the Bergarchi market, behind a busy eatery, I had stumbled on a pile of used cough syrup bottles.
Covered in mud and urine, the bottles made for a distressing sight.
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