Global Financial Crisis and India's Informal Economy : Review of Key Sectors

31 Dec 2009


This report examines the impact of global economic crisis on informal sector workers in India, the reasons for their vulnerability and impact on incomes, education, health and nutrition of waste-pickers, home-based garment workers, marginal farmers and chikankari workers in the country.

Ever since the global economic slowdown has begun to impact the Indian economy, Self Employed Women’s Association (SEWA) has been monitoring its member base and observing changes at the household level. SEWA conducted this survey, with the support of United Nations Development Programme (UNDP) India, to gauge the impact of the global economic slowdown on people belonging to the lowest income strata.

Relying on a combination of focused group discussions (FGDs) and personally administered questionnaires, SEWA reached out to 100 small and marginal farmers across five districts (across a number of randomly selected villages). The sample set had proportionate representation from different religions and social groups. A majority of these respondents were agricultural workers (the rest were farmers with small landholdings).

October (the month of festivals) 2008 was selected as the checkpoint, after which the economic slowdown intensified, and the respondents were asked about various aspects of their life, such as household income, expenses, children’s education, and health and nutrition, to compare these indicators prevailing before and after October 2008.

More than 80 percent respondent households reported that their financial condition (household income) worsened between October 2008 and March 2009. While very few of the affected were unemployed, most had either trouble finding the same volume of work or were working under more stringent payment terms. The reduced household income affected many other aspects. For instance, the number of boys and girls taking up part-time work nearly doubled. Almost no children of the surveyed respondents were studying in private schools anymore; a few had even dropped out.

The number of households who had stopped buying meat and poultry products trebled. A few households were finding it difficult to afford even milk and vegetables. Another aspect that was adversely affected was healthcare expenditure—the number of households relying on private healthcare plunged considerably. In total, the number of households seeking medical help dropped significantly, while the number of people using home-made remedies increased.

Farmers and agricultural workers were coping with the slowdown primarily by working harder and cutting down on expenses.

SEWA’s recommendations are based on the insights gathered from this exercise, coupled with its experience in this field for over three decades. The recommendations are based on three primary strategies to sustainable development.

1) Initiate measures aimed at marginal farmers, particularly those growing export crops

2) Strengthen the vulnerable sections of the society in such a way that they become better equipped to handle future crises (particularly through access to crises relief measures)

3) Reduce dependence on agriculture by building necessary skills and creating alternative employment opportunities

Some recommendations are as follows:

1) Micro-enterprises run by poor workers should be granted loans at a low interest rate, as well as a moratorium period of 5 years.

2) A market access fund should be set up to help micro-enterprises sustain, even at reduced capacities, as well as guarantee a market for their products.

3) Agriculture continues to be the major occupation in rural areas, and thus the following steps should be taken to boost it:

Farmer groups or collectives should be granted licence to sell seeds and fertilizers.

Storage facilities should be made available to small farmers to increase their holding capacity.

Employment generation programmes should be launched for skilled, as well as unskilled workers.

Community-based organizations and collectives should be strengthened to better equip people to access relief schemes launched by the government and other non-governmental organizations.

SEWA’s survey focused on workers and households, and covered the impact of the slowdown and the coping strategies adopted by the affected. This document summarizes the findings of the surveys conducted among small and marginal farmers involved in Gujarat.

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