CERP has recently released findings from the January 2021 Economic Vulnerability Assessment (EVA). The Economic Vulnerability Assessment is a phone survey conducted by CERP, which examines the economic impact of COVID-19 on households in Punjab. The first, second and third rounds were conducted in June/July 2020, September/October 2020 and December 2020/January 2021, respectively.
The main findings of the survey (conducted during Dec 29 – Jan 28) are below.
Income
Although employment rebounded significantly between Rounds 1 and 2, Round 3 data show that the labor market recovery has stagnated since then – the fraction of individuals unemployed fell from 33.7% in Round 1 to 21% in Round 2, and remains at 21% in Round 3. This pattern is seen for both urban and rural areas.
Urban and rural households both experienced partial income recovery initially but their trajectories have diverged in recent months, with income recovery petering out in urban areas and reversing in rural areas. Average urban incomes decreased by almost 32% in Round 1 (between February 2020 and May 2020), 11% in Round 2 (between February 2020 and August 2020), and 9.5% in Round 3 (between February 2020 and January 2021). Although rural respondents reported significantly lower losses on average in Round 1 (17.5%), rural areas saw a relapse between Rounds 2 and 3: while income losses decreased to 10% in Round 2, they deteriorated to approximately 15% in Round 3.
The Round 3 data continue to show heterogeneity in recovery patterns by education. Higher-educated individuals – those with more than matric schooling – experienced disproportionate income losses initially but also saw a larger rebound in incomes between Rounds 1 and 2, compared to those with lower education levels. Among respondents with more than matric schooling, 55.7% reported an income loss (relative to February 2020) in Round 1. This share fell to 37.0% in Round 2, and about 30% in Round 3. For those with lower levels of education, the recovery is weak and stagnating: among respondents with less than matric schooling, 45.8% reported an income loss (relative to February 2020) in Round 1. The corresponding proportions were 40.7% in Round 2,and 41.6% in Round 3.
‘Rural households’ expectations for month-ahead income (for February 2021) are worsening: they expect larger month-ahead income losses (a drop of 4.7% in Round 3, versus an expected decline of 1.5% in Round 2). Urban households’ expectations for income (for February 2021) are unchanged between Rounds 2 and 3, with these households expecting income losses of 2.6-2.8% in the month ahead. Short-term income expectations remain higher for households earning below-median income in February 2020: a month-ahead average expected increase of 3.2%, relative to an average decrease of 8.5% for households earning above-median income in February 2020. Longer-term (year-ahead) income expectations remain positive and high for all subgroups.
Spending
Unlike incomes, household spending had fully recovered to its February 2020 levels in urban and rural areas alike in Round 2. However, in Round 3, rural areas report a 1.7% decrease in spending compared to Feb 2020, whereas urban areas report an increase of 0.8%. Households expect spending to continue to
grow in the short term (an overall increase of 6.1% in the upcoming month). Expectations for spending in the next month do not differ systematically between rural and urban areas.
Financial Outcomes
Financial distress – in terms of a household’s ability to pay bills – remains high, affecting 1 in 5 households in urban areas and 1 in 3 households in rural areas. Despite a sharp decline from Round 1, when 45% of urban and 51% of rural households missed at least one payment, the proportion in round 3 is similar to that in Round 2, with almost 23% of households in urban areas and 32% in rural areas having missed at least one monthly payment in the last 2 months. The most common form of payment that is being missed by households continues to be electricity bills However, there is a sharp increase in respondents missing payments on ration/store loans from local general stores (33.5% in Round 3 relative to 21.5% in Round 2). This effect is stronger in rural areas, where 47% of rural households reported missing ration/store loans in Round 3 (compared to 25% in Round 2).
In Round 3, 23% of households reported borrowing money in the past two months (November-December 2020), which is unchanged from Round 2. Family/friends remain the main source of borrowed money, with respondents still borrowing amounts significantly higher than their income in February 2020.
Food
There has been a troubling increase in the fraction of households reporting food insecurity, i.e., inability to buy essential food items in the last 7 days, with 1 in 5 rural households being food insecure in Round 3. The fraction of food-insecure households increased from 9 to 14.2% in urban areas, and from 16% to 21.7% in rural areas, between Rounds 2 and 3.
Lack of resources and inflation were cited as the main reasons for this food insecurity: 53% of these households reported that food items were more expensive than usual, while 76% reported a lack of resources (not enough money) as factors driving their inability to buy essential food items.
Almost 3 in every 5 households (61%) in Round 3 versus 2 in 5 households (51%) in Round 2 report having to make some compromise on food (including relying on less expensive food items, going to bed hungry, reducing the size of meals, or relying on friends/relatives or donations for food.)
Cash and In-Kind Support
In Round 3, 93% of households that received cash or in-kind support reported getting assistance through the Ehsaas program, while 3% reported some other government program. Few respondents in distress reported receiving support: only 18.5% of households reporting food insecurity received cash or in-kind support in Round 3. Similarly, only 20.1% of those who earned below Rs. 17,500 in February 2020 reported receiving support. Rural households continue to receive less support than urban – furthermore, rural households’ access to support programs has worsened over time. Only 14.7% of rural food-insecure households received cash or in-kind support in Round 3, down from 17.9% in Round 2. In contrast, 24% of urban food-insecure households received assistance in Round 3, similar to 23.1% in Round 2.
Of those that applied for the Ehsaas Emergency Cash Program, 25% received support, 63% were denied support, and 10% have still not received a decision. Furthermore, the Ehsaas Emergency Cash recipients are only marginally more financially distressed when compared to those who did not get the transfer.
Concerns of Households
Similar to the previous rounds, the main concern for households in Round 3 was income/employment, with 29% of urban households and 33% of rural households citing it as their top most concern. 49% of households cited income/employment in their top 3 concerns.
Education is becoming a concern for an increasing proportion of households: it was a top concern for 13.9% of urban households and 11.4% of rural households in Round 3, compared to 6.5% of urban and 5.2% of rural households in Round 2. 39% of households in Round 3 cite education of children in their household in their top 3 concerns, an increase of 9 percentage points from Round 2. Health is the main concern for slightly more households in Round 3, 10.0% compared with 9.5% in Round 2 and 14.6% in Round 1. Inflation was cited as the top concern by 17.7% of respondents (down from 25.3% in Round 2).
Health
The significant disruptions to children’s immunizations that the pandemic caused have ceased. 12% of households reported missing required vaccines for a child in Round 1, which fell to 7% in Round 2 and to only 0.4% in Round 3. In Round 2, the lack of a polio vaccine was reported as the primary reason for missing a vaccine by 93% of households and the polio vaccination campaign has resumed in the country.
Twenty-six percent of households in both Rounds 2 and 3 reported that someone in the household felt anxiety, loneliness, or depression in the past 7 days. While this is a stark improvement relative to 42.1% of respondents reporting the same in Round 1, it remains high. Many households resumed seeking healthcare between Round 1 and Round 2. However, some households’ healthcare seeking behavior is disrupted anew between Round 2 and Round 3, with 6.6% in Round 3 reporting that they did not go to a doctor even when someone was sick compared to 1.4% in Round 2.
COVID-19
Almost 71% of households in Round 3 think lockdowns are at least moderately effective for slowing the spread of the virus, compared to 83% of households in Round 2 and 76% in Round 1.
Respondents’ willingness to get vaccinated against COVID-19 has become more polarized; only 5% of respondents are neutral about the vaccine in Round 3, as compared to 21% in Round 2. There has been an increase of 17 percentage points among respondents who say they do not plan to get vaccinated. Among those refusing to get a vaccine when it becomes available, in Round 3, 54% of respondents are concerned about the safety of the vaccine, and 38% believe that they have a healthy immune system and are not worried about getting infected.