Arthur Schopenhauer, a famous German philosopher, observed, “Life swings like a pendulum backward and forward between pain and boredom.” Perhaps he was right but he overlooked that in a crisis such as the COVID-19 pandemic, pain and boredom occur together. Lay-offs of the employed and deaths on a massive scale not just caused enormous pain and trauma but also mobility restrictions and closure of cinema halls, restaurants and restrictions on the scale of wedding ceremonies, and other forms of socialising during the lockdowns subjected large segments to unrelenting boredom.
The basis
Our study, based on eight waves of CMIE-CPHS (Centre for Monitoring Indian Economy which conducts Consumer Pyramids Household Surveys) before and during the pandemic (16th wave for the period January-April 2019 to the 23rd wave for the period May 2021-August 2021), is innovative as it simultaneously determines the incidence of COVID-19 and shares of food expenditure and socialising. The incidence of COVID-19 is driven largely by the source of transmission and the length/speed of transmission. The COVID-19 incidence determines the share of food expenditure and the two together determine the share of socialising expenditure of a household.
As mass lay-offs and interrupted food supply chains caused substantial income losses and food price spikes, low-income households barely maintained their subsistence while others made substantial adjustments to their allocation of household expenditure. However, food being a priority, Engel’s law suggests that the share of food expenditure rises as income falls. This is further aggravated by food price spikes. The two together cause the share of food expenditure to rise. Given the budget constraint, a higher share of food expenditure is expected to lower that of socialising expenditure. However, budgets vary with resilience to income and price shocks. So, if the (relatively) affluent absorb these shocks and still have a large share of discretionary funds, their socialising expenditure may rise to break out of a monotonous and boring lifestyle. But it will be a mistake to overlook the preference for socialising. Pulling together these arguments, income, food prices and preferences for socialising simultaneously determine the share of socialising expenditure. To capture the contrasts, we disaggregate the analysis into rural and urban, paying greater attention to the latter where the trauma of the COVID-19 pandemic was greater, employment and income losses, and food price spikes were more pervasive, and preferences and opportunities for socialising were far more wide-ranging.
The incidence of COVID-19 rose with per capita expenditure but at a diminishing rate in urban India. The share of food expenditure also rose but at a diminishing rate. The share of socialising expenditure exhibited the same pattern as the share of food expenditure. So, while the more affluent were more likely to fall prey to COVID-19 infections, their allocation of food expenditure rose. However, this did not prevent them from spending more on socialising. As the more affluent travelled more, they were also more susceptible to the COVID-19 virus; their share of food expenditure rose because their income losses weakened the cushion against food price spikes but they could still afford their essential food intake; and the negative effect of rising per capita expenditure on socialising was more than offset at higher per capita expenditure, pointing to their stronger preference for socialising and their ability to access expensive eating out, lavish celebration of weddings and festivals (but within the limits imposed during the lockdowns).
Rural-urban contrast
As expected, the impact of food expenditure shares on socialising expenditure shares of households varies between rural and urban areas. The positive and significant effect of food expenditure shares of urban areas suggests a direct relationship, i.e., as households spend more on food, a higher amount is spent on socialising. Urban households are more addicted to socialising and, hence, despite higher food expenditure they managed more socialising.
The contrast with rural areas is striking but plausible. The incidence of COVID-19 varied with expenditure but at a diminishing rate. The share of food expenditure fell but at a diminishing rate as a large share of food consumption was self-produced and the market food price spikes were muted. Hence, it is not surprising that the socialising expenditure rose significantly. Thus even rural areas witnessed an expansion of outdoor facilities for eating, and celebration of weddings and festivals, and perhaps also a growing preference for socialising.
Food price stabilisation is a priority. The premise that inflation is largely a monetary phenomenon as reflected in increases in policy interest rates by the Reserve Bank of India is debatable. That inflation continues to be driven by supply chain disruptions during the COVID-19 pandemic is overlooked. Further, disruptions in energy and fertilizer supply due to the Ukraine war and the continuing surge in food prices have entrenched inflationary expectations that call for decisive policy intervention. An overhaul of the Public Distribution System and, specifically, more stringent regulation of diversion of food supply by PDS shops to the market are imperative.
Subject of mental health
A risk not emphasised enough is the deterioration of mental health related to COVID-19 pandemic-psychological stress, depression and loss of life satisfaction (The Lancet Psychiatry, November, 2022). Worse still, the loss of family members due to COVID-19 infections is often shattering and even results in suicidal tendencies. Unfortunately, psychiatric treatment in India remains woefully inadequate. Further, those who have access to qualified psychologists, psychiatrists, appropriate medicines and social networks that greatly destigmatise mental health disorders are located in the urban areas, and on top of the socio-economic ladder. But these privileges are not readily accessible in India’s rural villages ( The Hindu, October 29, 2018).
In brief, the impact of the pandemic is varied and daunting.
Nidhi Kaicker is Assistant Professor, B.R. Ambedkar University, Delhi. Aashi Gupta is a doctoral student in Economics, Delhi School of Economics, Delhi. Raghav Gaiha is Research Affiliate, Population Studies Centre, University of Pennsylvania, Philadelphia, U.S.