People with no income still higher than pre-COVID levels, poor most affected by crisis: Study

“Covid-19 has magnified the fault lines within the consumer economy, especially income inequality,” it said. On the usage front, it pointed to the mass market segment (those earning between Rs 10,000-20,000 per month) data, which is showing a 40 per cent decline in consumption as compared to the pre-COVID levels.

The COVID-19 pandemic has been difficult for the country's poor going by income generation and consumption data, according to an analysis of data of 5 lakh people for May by a credit risk assessment company. The COVID-19-induced lockdown that started on March 25 and is yet to be lifted has hit the economic activity. Sights of millions of walking, cycling or hitching rides back home have led to concerns over sustainability for the poor. Private think-tank CMIE had said that unemployment in India had risen to 27 percent as of May 3 and has improved later. In its analysis, Creditvidya said even though there was a decline in the number of people with no income in May at 7.5 percent of the workforce as against 9 percent in April, the same was elevated when compared with the pre-COVID levels of 6 percent.

However, incomes seem to be muted, as the percentage of the workforce with earning less than Rs 3,000 a month continues to be elevated at 24 percent of the workforce as against 15 percent before the onset of the crisis, it said. "Covid-19 has magnified the fault lines within the consumer economy, especially income inequality," it said.

On the usage front, it pointed to the mass market segment (those earning between Rs 10,000-20,000 per month) data, which is showing a 40 percent decline in consumption as compared to the pre-COVID levels. The mass-market segment constitutes for 70 percent of the population, it said, adding that consumption declines are prevalent in the other 30 percent as well for May.

Consumption by the mid-market (earning between Rs 20,000-60,000 a month) is down 21 percent while the same for the affluent segment (those earning over Rs 60,000 per month) is down 17 percent as compared to the pre-COVID levels, it said. This has led to an increase in saving levels across the mid-market segment, it said, adding that this is a sign of conservatism.

The company's co-founder and chief executive Abhishek Agarwal said, "Increasing credit supply alone will not get us out of this crisis. It requires a strong, meaningful fiscal stimulus to support the most vulnerable segments of the population. Left unchecked, the shock to consumption will affect credit growth and stymie production, taking the Indian economy into a downward spiral." The company has launched a monthly dashboard of the data findings for the general public usage starting from May.