Income support during lockdown didn’t just battle poverty – it might have helped combat Covid-19 too

A new study has found that income support measures in low and middle-income countries helped reduce the spread of Covid-19. While income support measures were aimed primarily at securing livelihoods at a time of lockdown, this new research shows it also had a prominent secondary effect in allowing people to stay at home, thus helping them follow pandemic restrictions better.

This points to a relevant debate about what kind of state support measures could have led to better public health outcomes during the pandemic. For instance, India’s Covid-19 relief package mostly focused on providing free rations to people, with almost no income support. As a result, some experts had called for more income support measures such as cash transfers to also be included.

How did lockdowns play out?

Globally, the biggest response to contain Covid-19 has largely been centred around restricting the movement of people. As per reports, almost half of the world’s population was under some form of a lockdown by the first week of April 2020.

The study, titled “Poverty and exposure to Covid-19: The role of income support”, by Ulugbek Aminjonov, Olivier Bargain and Tanguy Bernard, from the University of Bordeaux in France shows that income support such as cash transfers allowed people in poorer-income areas to stay at home more and thus reduced the spread of Covid-19.

Relying on pre-pandemic surveys on poverty, the study analyses 729 subnational regions across 43 countries in Africa, Latin America and Asia. It looks at data from Google Covid-19 Mobility Reports for 202 days – from February 15 to September 3, 2020. Google Mobility Reports uses anonymised data from apps such as Google Maps to see how people’s movement, such as commuting for work or provisions, changed through the pandemic.

Poor people were less likely to be able to follow lockdowns

In low-income and middle-income countries, poorer regions were able to comply with containment measures less than richer regions. This was because they could not afford to stay at home and miss out on work.

As can be seen in the graph above, both poorer and richer regions had similar levels of mobility to workplace before mid-March, 2020. When Covid-19 hit and governments started implementing movement restrictions, workplace mobility fell across regions.

However, the drop was significantly lower in poorer regions leading to poorer regions having higher mobility during the pandemic than richer ones. This difference in mobility shows “a higher propensity to continue labour activities in these [poorer] regions”, explained the study.

This mobility difference was specifically due to livelihoods, since movement for provisions, such as food and drugs, were consistent in poorer and richer regions.

How income support helped implement lockdowns

The authors argue that almost 1.1 billion people across the world got cash transfers as a state-support measure.

When people cannot afford to miss work, stopping their movement is difficult. However, income support helps them stay at home. This allows them to adhere to the lockdown measures better. Thus, apart from giving people a livelihood, cash transfers “help poor populations comply with public health rules, and thus contain Covid-19”, the authors write.

The charts above show that there was a considerable drop in mobility to workplace when given income support, both in poorer and richer regions. As shown in Figure 2 above, the effect of income support was so substantial that during lockdown, a poorer region with income support had the same mobility as a richer region. On the other hand, the mobility of poorer regions with no income support was much higher.

The chart for “All regions” in Figure 3 also shows that when given support, the lockdown drop in mobility to the workplace in poorer regions was the same as that in richer regions without any support.

The trend of reduction in mobility after income support is consistent across most regions. In fact, in Latin America and the Caribbean (as shown in Figure 3 above), poorer regions on income support did better than even richer regions on income support. In Asia, poorer regions on income support performed almost as well as richer regions on income support.

The one region which didn’t see as much change in mobility was Africa. Even after income support, there was a significant gap in mobility between poorer and richer regions. The authors argue that this could possibly be due to lower living standards and labour conditions there.

Therefore, the authors write, “these findings emphasise the health externalities of social protection for poor people who must leave their home to maintain livelihoods during the pandemic despite containment rules and higher risks of contagion”.

This reduction in movement directly helped in containing Covid-19 spread. “Ultimately, these programmes reduce by half the additional contagion caused – via the mobility channel,” the study says.

India did not follow this income support model

India’s stimulus package, as per the government, was about 10% of the GDP. However, a large part of it (almost three-fourths) was credit guarantees and easing liquidity in the market.

The effective expenditure the government incurred for the stimulus package was reported to be a small section of that: only 1% of its gross domestic product. Even out of that 1%, the government largely focused on providing free rations to people – not income support.

The PM Garib Kalyan Package of Rs 1.7 lakh crore, announced in March 2020, gave free ration to around 80 crore people. Cash transfers were a small part of the package. The government promised Rs 500 per month, for three months, to 20 crore women with Jan Dhan accounts and Rs 1,000 each to 3 crore poor senior citizens, widows and disabled. Apart from that, it front-loaded its already existing obligation of cash transfer to farmers.

While giving food grains is also extremely important in such a time, it isn’t enough. Economists like Raghuram Rajan and Reetika Khera have argued the need for both cash transfers and food. Even the Standing Committee on Labour, in August, recommended that loans given to street vendors under the PM-SVANidhi Scheme be converted to direct cash grants.

Some states had announced cash transfers. States like Maharashtra had announced a cash transfer of Rs 1,500 for construction workers, registered hawkers etc., while Delhi had announced a cash transfer of Rs 5,000 for construction workers, Bloomberg Quint reported.