India’s internal remittances, driven mainly by more than a hundred million working migrants, stood at 26 billion US$ before COVID-19 struck. But the loss of jobs and livelihoods during the prolonged nationwide lockdown triggered a large-scale reverse migration, especially of those working in the informal sector. Experts estimate that as many as 35 million migrants may have returned back, impacting remittance inflows substantially. This was reflected in Aadhaar enabled Payment System (AePS), witnessing the second steepest decline in remittance transfers since its inception, while most payment banks saw (formal) remittance flows decline by almost 80 per cent during the lockdown (Shukla & Manikandan, 2020).
Since then, a number of small-to-medium scale surveys carried out in different parts of the country have explored the impact of COVID-19 on remittances and households that depend on them. Decreasing food consumption by reducing the number and quality of meals, dependence on rations and other assistance extended by the government, informal borrowing to smooth consumption, and increased demand for MGNREGA work were some of the overarching findings from these surveys (Bera, 2020) (Sriraman & Singh, 2020) (Limaye, Chandurkar, & Choudhury, 2020). Given this background, we set out to explore the impact of COVID-19 on remittances[1] at a broad, national level by using India’s largest household-level panel dataset – the Consumer Pyramids Household Survey dataset of Centre for Monitoring Indian Economy.
We compared remittance receiving households with other households over twelve months between September 2019 and August 2020 and found that while remittance receiving households had a significantly lower income than other households overall, their incomes were comparatively less affected during the lockdown, since remittance income stayed resilient. We further categorised remittance receiving households into three groups based on their level of dependence on remittances (<30%, 30-60%, >60%). We found that as dependence on remittance increased, income stability through the COVID-19 lockdown period also increased. Furthermore, when we considered occupation as an additional factor by classifying different occupations into two broad categories of salaried, skilled, white-collar occupations and non-salaried, low/semi-skilled and non-white-collar occupations, we found that having a safe job was an added cushion on top of remittances. There was no noticeable difference in the expenditure patterns of different categories of households, but an interesting finding was with regard to borrowings, where we found that a lesser share of remittance receiving households was indebted during the lockdown than before the lockdown. However, this share remained the same for other households before and during the lockdown period.
Even though our study shows incomes of remittance recipient households remained stable through the short-term, it has to be kept in mind that COVID-19’s impact on remittances has been projected to be more severe in the long-term (World Bank Group, 2020).[2] With mass reverse migration continuing well into the latter half of 2020 and a more devastating second wave of COVID-19, the financial position of remittance recipient households may be significantly worse off than what this analysis suggests (Shukla, 2021).
For more detailed statistical findings and visualisations from the analysis, check this slide deck.
[1] While our initial objective was to assess the impact of COVID-19 on migrant households, we were not able to accurately identify migrant households in the dataset. Therefore, our analysis is only restricted to analysing the impact of COVID-19 on households receiving private transfers.
[2] World Bank had predicted only a 4% drop in remittance inflows for 2020 but a steeper 11% drop for 2021, for South Asia
References
Bera, S. (2020, May 29). Bharat’s lockdown diet is boiled rice, salt. Retrieved from Mint: https://www.livemint.com/news/india/bharat-s-lockdown-diet-is-boiled-rice-salt-11590675325812.html
Limaye, K., Chandurkar, D., & Choudhury, N. (2020, July 13). Lockdown and Rural Distress: Highlights from phone surveys of 5,000 households in 12 Indian states. Retrieved from IFPRI: https://southasia.ifpri.info/2020/07/13/lockdown-and-rural-distress-highlights-from-phone-surveys-of-5000-households-in-12-indian-states/
Shukla, S. (2021, April 14). Impact of COVID-19 curbs, reverse migration: Remittances fall up to 10% in 2 weeks. Retrieved from The Economic Times: https://economictimes.indiatimes.com/news/economy/finance/remittances-fall-up-to-10-in-2-wks/articleshow/82057669.cms
Shukla, S., & Manikandan, A. (2020, April 04). Remittances to Bharat hit by return of the native. Retrieved from The Economic Times: https://economictimes.indiatimes.com/news/economy/finance/remittances-to-bharat-hit-by-return-of-the-native/articleshow/74974059.cms?
Sriraman, P., & Singh, P. (2020, September 22). 84% construction workers in Pune, Ulhasnagar not paid in lockdown: Survey shows devastating impact of GDP contraction on migrant labourers. Retrieved from Firstpost: https://www.firstpost.com/india/84-construction-workers-in-pune-ulhasnagar-werent-paid-during-lockdown-survey-shows-devastating-impact-of-gdp-contraction-on-migrant-labourers-8836781.html
World Bank Group. (2020). Migration and Development Brief 33. The Global Knowledge Partnership on Migration and Development.
Cite this item
APA
Ponnathpur, R. (2021). Impact of COVID-19 on Remittances: An Analysis using CMIE Data. Retrieved from Dvara Research Blog.
Chicago
Ponnathpur, Rakshith. 2021. “Impact of COVID-19 on Remittances: An Analysis using CMIE Data.” Dvara Research Blog.
MLA
Ponnathpur, Rakshith. “Impact of COVID-19 on Remittances: An Analysis using CMIE Data.” 2021. Dvara Research Blog.
