The lockdown has had even larger effects on migrant families, because there has been a 61% dip in the remittance receipts since lockdown. A large part of this is because migrants who would normally be away, earning income elsewhere, were forced to return home; 65% of the migrants who were in either India or other cities in Nepal during 1 January – 1 April 2020 returned home in a rush during the first two weeks of April.
Further, individual migrants who are still away are only able to send half of what they used to send before the lockdown. The usual outflow of migration has almost stopped. A prolonged lockdown therefore means lower future remittances.
In an experiment, when we provided some of these poor, rural, migrant-dependent households loans during the pre-harvest lean season in 2019, they invested a large portion of that money buying fertiliser. Agricultural investment was significantly higher than those who did not receive such loans.
That creates an important worry that the substantial erosion of income we observe in April 2020 will lead to lower investments in the upcoming planting season in June-July. This will lower yield during the November harvest. Substantial and timely government assistance is necessary to avert that situation.
The income loss has also caused food insecurity in May to rise to levels typically only observed during lean seasons, as the data reveals. Some 65% of our respondents worried about having enough food in the house when we spoke to them in late April. As a benchmark, that number was 67% in September-October 2019 (during the pre-harvest lean season), and 43% in January after the rice harvest.
Similarly, 22% were forced to reduce their portion size in April, compared to 26% during the lean season and 13% in January. What is most concerning about these numbers is that the April food insecurity is being reported during the wheat harvest, a period when people should have comparatively easy access to food.
It is fortunate that this COVID-19 crisis hit during the season when poor rural households still have some grain stocks to draw down. If the lockdown is prolonged into July or August, then the crisis will be layered on top of normal food insecurity, leading to greater desperation than what we are observing now. These households report that their stock of rice has declined rapidly since 24 March. If the trend continues, the risk of hunger and malnutrition may reach dangerous levels.
As policymakers know, agrarian economies are seasonal. This has two important implications for decision-making. First, while the economic costs of lockdown we observe in the data are already bad, it may not give you a full sense of how much worse it can get in rural areas during lean periods in the agricultural calendar.
Second, the investments that are being held back now, in either fertiliser or in migration, will have effects on agricultural productivity, remittance income and food security in a few months. It will also have spillover effects on other economic activities via input-output linkages, food supply chains and trade-links. Beyond providing relief to the rural poor, devising smart policy responses will require some analysis of those downstream supply chain effects.
Our goal here is to highlight some of the economic and human costs of lockdown on the rural poor that are already evident in the data, as well as making decision-makers and the public aware of other, even more dangerous concerns that may arise as we move through the agricultural crop calendar.
Public health and disease spread are also important concerns, and the government must carefully weigh the benefits and costs of continued lockdowns on hunger, malnutrition, in addition to the risk of continued COVID spread. The policy choices are not only binary – full lockdown versus full re-opening.
The recent easing of the lockdown in some sectors, or some areas to prioritise for re-opening is a welcome news. This should continue based on the review of the specific disease risk weighted against the dependence of the most vulnerable members of society on that area or sector.