The impact of Covid-19 on household poverty: examining impacts and resilience in a 40-year timeframe in rural Rajasthan (India)

ABSTRACT

To what extent has chronic poverty increased during the pandemic? In July and August 2021, we revisited seven villages of southern Rajasthan (India), where we had studied household poverty dynamics in 2002. We find that in the two decades before the pandemic (2002–2020), people’s structural positions improved vastly, chronic poverty fell from nearly half to less than 20% of households. These gains in resilience helped people cope with the pandemic. The majority suffered deep income losses between February 2020 and August 2021, but there is no evidence of any substantive rise in chronic poverty.

KEYWORDS:

• Covid-19
• poverty dynamics
• chronic poverty
• resilience
• India

JEL CLASSIFICATION:

• I30
• I32
• I38

Acknowledgments

This paper is a substantially revised version of an earlier draft entitled ‘Extensive Income Losses But Little Change In Long-Term Poverty: A longitudinal study of 7 Rajasthan villages before, during and after Covid-19’ available at Ideas for India (https://www.ideasforindia.in/images/pdf/PandemicPoverty7Villages-converted.pdf). We are grateful to the editor Professor Cheryl Doss, an associate editor, and three anonymous referees of this journal for their constructive comments.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 These estimates are, respectively, those made available by the Pew Research Center and Azim Premji University. See, respectively, Kochhar (2021) and (2021).

2 Shocks, broadly, can be defined as ‘adverse events that lead to a loss of household income, a reduction in consumption and/or a loss of productive assets’ (Dercon et al., 2005). These include climatic, economic, political/social/legal, crime and health shocks. Krishna (2010) notes health shocks to be the most common reason for households falling into poverty in India.

3 Putting it all together, Hoddinott (2006, p. 317) argues: ‘consumption smoothing implies an attempt to preserve assets, but consumption is an input into the formation and maintenance of human capital. This implies that the distinction between consumption and asset smoothing, while useful as a descriptive tool, may be somewhat misleading. Rather, household responses to adverse shocks are effectively changes in their asset portfolio, with a critical issue being the extent to which the drawdown of a given asset has permanent consequences’.

4 See Angelsen and Dokken (2015); Carter and Barrett (2006); CPRC (2005); Hulme and Shepherd (2003); Krishna (2010); Sherraden (1991, 2001).

5 See, for instance, Carter and May (2001); Haddad and Ahmed (2003); Jalan and Ravallion (2000); and McKay and Lawson (2003).

6 In addition, it has been argued that for advancing a deeper understanding of chronic poverty, qualitative research needs to go beyond the money-metric conceptualizations, and it is necessary to develop concepts of chronic poverty further utilizing nonmonetary dimensions (McKay & Lawson, 2003).

7 The methodology has also shown itself to be extremely versatile. It has been used in different parts of India and in several countries. For instance, in Kenya and Peru, it was adapted to examine the role that livestock plays in poverty (see, Kristjanson et al., 2007, 2010) and for understanding poverty dynamics (see Radeny et al., 2012). In Uganda, the role of health was given special consideration (see, Krishna et al., 2006).

8 A necessarily brief description of this methodology is given here for keeping within allocated space limitations. For more details on the complexity of the methodology including safeguards taken against biased community group composition, selective recollection, and vague recall, the author’s larger work is recommended (Krishna, 2010).

9 Housing is a notable omission from this list. Hardly anyone in these villages is entirely homeless, and though improving the condition of one’s home is important for people, it comes at a later point in the stages of progress. In urban contexts we find housing coming in very early in the stages of progress. Rural and urban stages are different as a result.

10 This extent of attrition is to be expected and is within an acceptable range for studies of this nature. See, e.g. Alderman et al. (2001).

11 The protocols of this study were examined and approved by the Institutional Review Board of Indian Institute of Management (IIM)-Udaipur.

12 Every member of the team was fully vaccinated. They were enjoined upon to remain masked and were provided with stocks of extra masks to offer village interlocutors.

13 It is worth mentioning that the poverty analysis for the two periods is based on recall data from the respondents and therefore the figures are not strictly comparable.

14 We employ resilience in the manner defined by Barrett et al. (2021, p. 5) omnibus examination, as follows, ‘resilience is a latent variable that captures the effects of some combination of observable and unobservable attributes – of an individual, household, community, or more aggregate unit – that limit the adverse well-being effects of ex ante risk exposure (i.e. stressors) and/or the near- or longer-term consequences of shocks’.

15 Health insurance coverage has grown, though in villages of these kinds still falls short of 20% of the population, a limit indicated, for instance, by ICE360’s 2016 survey of 61,000 households.

16 One lakh is equal to one hundred thousand (10⁵), and 75 rupees is equivalent to 1US$ (approx. in year 2021).

17 See, for instance, Auerbach and Thachil (2021), and Downs-Tepper et al. (2021).