INSUBCONTINENT EXCLUSIVE:
Rural India has fell into a debt trap as Covid pandemic has affected employmentAsha Devi doesn't remember how many meals she has skipped as
she struggles to feed her family of seven in a remote corner of northern India where the novel coronavirus is compounding old problems of
rural debt and poverty.Devi, 35, had to mortgage her land for a 20,000 rupee ($270) loan and six month on, as the money runs out, she has
stopped buying milk, halved her use of cooking oil and can afford lentils only about once every 10 days.With her construction worker husband
jobless, she's facing going deeper into debt to get by."Sometimes I go to sleep hungry
Last week, I think I went to bed hungry at least twice but I can't remember," Devi told Reuters as she wiped away tears with her threadbare
sari outside her mud house in her village in Uttar Pradesh.Centre has promised free food grains for the poor but the rations are limited
and not enough for the family, Devi said.The coronavirus and a lockdown aimed at stopping it last year saw millions of people thrown out of
jobs in cities and towns and forced back to their villages, and ever higher levels of debt.Interviews with 75 households in a cluster of
eight villages in India's most populous state showed household incomes have slumped nearly 75 per cent on average
Almost two-thirds of the households have taken on debt.Devi's husband used to have a job in construction in the more prosperous state of
Punjab, which kept the family going
Now the job has gone and he's back home and struggling to find work.Others like him who have lost jobs crowd around a brick kiln near their
village every day hoping for work.Holding Back RecoveryBig debt and low income in the countryside will hold back any economic recovery the
government is trying to generate and also dent private savings and investment for longer than expected, economists say."It will have a huge
impact and prolong the recovery process
Private consumption and investments both will be hurt
There is merit in finding ways to put money in the hands of the people," said N.R
Bhanumurthy, economist and vice chancellor at Bengaluru-based B R Ambedkar School of Economics.India's gross domestic product fell by a
record 7.3 per cent in the year that ended on March 31
The government has forecast 10.5 per cent growth for 2021-22 but a second wave of the pandemic has dented expectations and several
economists have cut their forecasts.The poor have especially been hit hard.The Reuters investigation showed most of the 75 households in the
Uttar Pradesh cluster, a combined 518 people, have taken out total debt of 6.12 million rupees ($82,250), more than 80 per cent of which
remains unserviced, the householders said.Borrowing has risen by three times since the pandemic hit in March 2020 and about half of that was
taken out the past six months, the survey found.With no jobs or with bread-winners sick, the cumulative monthly income of the 75 households
has dropped to about 220,000 rupees ($2,960) from 815,000 rupees ($10,960) before the pandemic."Almost everyone is in debt in this village
and unemployment is the biggest problem," said 55-year Komal Prasad, a former headman of Gauriya, a hamlet in the cluster with a population
of just over 2,000 people.Only about 30 per cent of the people in Gauriya had a job or were looking for work, many fewer than before,
villagers said.Juggi Lal, a 35-year-old farmhand, said she was struggling to buy medicine for her disabled husband because there was no work
and she owed 60,000 rupees ($806) to a moneylender."Every morning I wake up thinking what work will I get, how will I get through the
day?"Rural unemployment rate, which used to hover around 6 per cent before the pandemic, rose to 8.75 per cent in June, according to the
Mumbai-based Centre for Monitoring Indian Economy (CMIE).Ripple EffectThe mix of lower incomes, higher debt and rising prices of staples is
dampening demand in the countryside where two-thirds of Indians live.Sales of everything from biscuits, tea and lentils to auto parts have
Some have shut down shops that their families have run for generations.Gosh Mohammed, 43, used to sell up to 8,000 rupees ($107) of
groceries a day before the pandemic
Now it's down to 1,000 rupees ($13.5) a day.He has taken 60,000 rupees worth of goods from a wholesaler on credit but hasn't been able to
pay it off for six months."I never used to take goods on credit because buying with cash gets us more of a discount," Mohammed said."Now I
think I'll have to shut my shop as wholesalers have stopped giving me credit and I've sold the goods on credit and that money isn't likely
