Surviving another day on the edge…..Cordelia Jenkins & Nidhi Misra
Inflation has hit those living on the periphery of the economy hardest; the slightest shock can lead to destitution
Inflation has hit those living on the periphery of the economy hardest; the slightest shock can lead to destitution
New Delhi: Karan Singh, a flag maker in east Delhis Aradhak Nagar colony, is eating fewer vegetables these days. Part of Indias huge informal labour force, Singhs expenses have far outpaced his income from tailoring, which he says has plateaued in the past five years.
A relentless price rise since 2008 has meant his food costs have more than doubled. Almost four years ago, we used to buy the same quantity of vegetables and masalas for less than half what we pay now, says Singh, whose monthly expense on these items has jumped to Rs. 700 from Rs. 300.
Although prices in Aradhak Nagar for basic foods have been rising consistently since 2008, when inflation began to accelerate, this years deficit rainfall is making it worse. Wholesale prices of food rose to 10.81% in June from 10.74% in May, despite a slight decrease in the overall inflation figure, according to official data released on 16 July.
When prices rise, the hardest hit are those on the periphery of the economy, such as informal labourers living in illegal colonies, say experts. Its not just the extra rupees needed for an onion or a sack of rice, these people, with no access to the safety nets of social security programmes, are much more exposed to risk than their counterparts in formal employment.
Devesh Vijay, a fellow at the Delhi Universitys Institute of Lifelong Learning, has studied the economy of Aradhak Nagar since 1988, when he conducted a survey on income and expenditure in the slum, monitoring the minutiae of household budgets until 2009.
For a long time, nothing much was known about Indias slums. In 2001, the Census of India collected detailed data about slums in cities with over 50,000 people. It asked about literacy, population figures and the number of children in these slums. The census found that there were 42.6 million people who lived in slums in cities with a population in excess of 50,000. That data has since been revised up to 52.4 million by a ministry of housing and urban poverty alleviation committee to include settlements of 20,000+. The next round of census slum data (2012), on housing characteristics, is expected in August.
Much has changed over the past 30 years in the slum, according to Vijay. There is a lower middle class growing within the slum, he said. Real wages have risen 20% between 1988 and 2009, and there is a new class of entrepreneurs who are into moneylending, are landlords, or work for politicians.
Much of the rise in earnings, however, has been eroded by the soaring prices of everyday items.
According to Vijays surveys, the average price of 10 commoditieswheat, rice, pulses, cooking oil, gas cylinders, sugar, potatoes, cloth, rent and kerosenerose nearly 500% in the 20 years between 1988 and 2009. Since then, the price increase has been sharper.
The governments minimum support price for wheat, rice and sugar cane has risen by 47%, 28.5% and 78.6%, respectively, from 2007-08 till the current yearand the trend in retail prices is usually much sharper. This more than offsets the 20% increase in real wages referred to by Vijay. Singhs neighbour Ramu Devi, who works as a part-time maid in two households in the neighbouring colony of Surya Nagar, agrees: Salaries have not increased at the same pace as expenses, she says.
Hard times
When times are hard, residents of Aradhak Nagar tend to cut back on such things as milk and childrens pocket money, says Vijay. The demand for alcohol remains constant though, he adds, regardless of the state of the economy.
Everyone over the age of 12 drinks here, says flag-maker Singh, a statement that many in the slum echo, although the extent of alcoholism is hard to verify. Two of Singhs younger brothers are alcoholics. They spend almost Rs. 300 on alcohol daily. I provided for them for as long as I could, but when they started working, they did not contribute any money towards the family and spent it all on alcohol. Now they fend for themselves. Despite that and the recent squeeze on household budgets, the residents of Aradhak Nagar have been rapidly climbing the rungs of a growing consumer economy that is extending its reach even into Delhis slums.
Almost every house now has a TV, says Vijay. Even one of the beggars had access to cable TV. With many more women working as maids (158 in 2006 compared with 20 in 1988), double incomes are more common. In 1988, according to Vijays research, Aradhak Nagar had 21 television sets, a video cassette player, four motorbikes and one room cooler. By 2006, 206 families owned 178 TVs, 84 refrigerators, 69 gas cylinders, 73 coolers, 30 washing machines, 194 mobile phones, 35 two- wheelers and three cars. These are mainly confined to families with jobs in the organized sector, Vijay says. And a lot of the purchases are second-hand. Improved access to bank accounts and mobile phones was highlighted by the most recent census data on scheduled caste households. Census data released earlier this year showed access to banking services rose from about one in every four persons in 2001, to one in two in 2011. This is mirrored in the case of Aradhak Nagar.
While many Aradhak Nagar residents have bank accounts, their dealings with these banks are still limited, says Rajender Singh, flag-maker Singhs uncle, who runs a tailoring shop in the slum.
Moneylenders in the slum charge 5-10% interest a month, says Rajendra Singh, much more than 2-3% at a bank. But the banks keep changing the rates and so we lose count of how much we are to pay, he adds. When we take a loan from a moneylender, were not worried since it is not official. Sometimes if we cannot pay the loan for a month, they let it go and allow us to pay later, although, if the bank tells us clearly at what rate the interest is fixed, then we can muster up the courage to take a loan.
Managing risk
Access to safe loans is particularly important to the informal sector. Gautam Bhan, a senior consultant at the Indian Institute of Human Settlements, working on slum-resettlement policy and urban economics, says the real problem for the informal sector is not low or unstable incomes, but that they have little or no safeguard against risk. The slightest shockan illness, an accident, a firecan lead to destitution rather than just a setback. This is why social security is about so much more than just cash transfers or income support.
Flag-maker Singhs family budget is carefully balanced, down to the last rupee, and any unplanned expense can topple it, plunging the family into dangerous levels of debt. In 1995, for example, Singhs brother was seriously injured in a road accident. Then earning some Rs. 6,000 a month and without health cover, Singh had to raise cash to pay for his brothers treatment. He borrowed Rs. 30,000 from the colony chit fund, Rs. 5,000 from another tailor, and cajoled Rs. 14,000 from his employers, a patchwork quilt factory that he subsequently ran away from to escape the repayments.
We went to the hospital and the total bill was almost Rs. 60,000, he says with a shrug. I sold my wedding ring and my wife sold whatever little jewellery she had. When we had no money, we would give jewellery to the people at the hospital as payment.
The family barely scraped through the crisis, and Singh learned a tough lesson. We try to save at least a thousand rupees each month now so that when I have to work as a labourer, we have some money to keep us going, he adds.
Singh has also bought policies from Life Insurance Corporation of India for his two daughters, on which he pays a premium of Rs. 760 a month, but his real regret is that he passed up the opportunity to get a job with the Municipal Corporation of Delhi (MCD), when it came to the slum on a recruitment drive in the 1990s. Those days, MCD jobs paid thousand rupees a month and I made at least Rs. 7,000, he says. Now they pay up to Rs. 20,000 and I still earn the same.
Its not just the money, government employees also receive pensions and healthcare benefits.
For Singh, the choice to remain in the informal sector has cost him in more ways than one. The blow caused by his brothers accident could have been softened if the family had access to health insurance. By contrast, Manish Kumars family was able to mitigate the effects of a similar disaster.
Kumars parents worked as sweepers in the organized sector until a couple of years agohis father for the municipality and his mother for the State Bank of Patiala. With a combined monthly income of Rs. 31,000, Geeta and Ramesh were able to pay the Rs. 14,500 a year fee for their son to attend Indraprastha University and Kumar duly graduated with a degree in physical therapy.
Then, last year, Geeta fell ill with a kidney ailment and spent a month in the hospital on dialysis machines. We had to take a loan and spend from our savings, says Kumar, a powerfully built, but soft-spoken young man, who stands with his arms crossed in front of him, the likeness of the physical trainer he wants to become. His mother didnt survive the disease. We did not know she would pass away so suddenly.
Geetas hospital bills came to nearly Rs. 3 lakh. We could have claimed the bills from the bank that employed her if we had submitted them while she was alive, but my mother kept saying we should submit them all together, says Kumar.
If hed been born into another family, this train of events might have ended Kumars ambitions, but thanks to his fathers savings and the loan they took from the community chit fund, the family was able to claim the cost of Geetas treatment.
Today, Kumar is an intern at the citys Guru Teg Bahadur Hospital. After I finish, I can earn up to Rs. 7,000-8,000 a month through private practice, he says, doing the maths in his head. And, we have my mothers pension too.