For 53-year-old Brajesh Kumar (name changed), working for a private builder in India’s Gurugram city, a typical working day before the Covid pandemic-hit meant meeting various architects and supervising construction at the site.
As a construction engineer, Kumar would also ensure quality control and ensure that the work keeps progressing according to schedule. His life was too busy to think of anything else.
Five months into the pandemic, all he finds himself doing is searching for reasons to look busy. He keeps sifting through and arranging old files, as well as handling a handful staff on the site, where work has almost come to a standstill.
Last month, Kumar suffered a big jolt – a 66 percent salary cut.
Kumar told Sputnik, “My salary has been reduced from INR 150,000 ($2,000) to INR 50,000 ($666.6). It came as a setback but one has to survive somehow for the time being.”
The Covid-19 pandemic and the abrupt salary cut dealt a body blow to Kumar’s personal finances in the face of liabilities such as making provisions for his 18-year-old son’s studies and tending to his ailing mother’s health.
“My salary has been curtailed to an amount I was earning more than a decade ago. For the next two to three years, I have decided not to spend on anything apart from my son’s education and mother’s health requirements,” said Kumar, who asked not to be identified by his real name.
He says his other monthly outgoings include the rent on his flat, where he lives in Delhi, and the loan instalment on a residential flat that he owns in Noida – in neighbouring Uttar Pradesh.
He says he is barely left with any penny after meeting all these monthly expenses.
Pandemic Pushing Jobless Professionals Back Home
Like Kumar, a host of other professionals – part of India’s burgeoning middle class – have been forced to bear the brunt of the pandemic in the form of job losses and pay cuts.
Software professional Kishore Bhatt (name changed) wasn’t even as lucky as Kumar. He was handed his Pink slip when his company started laying off staff due to the pandemic.
But thankfully, his wife had a job. Her company allowed her to work from home. Bhatt, who lived in rented accommodation in Noida, vacated their flat immediately. The couple moved to his parent's home in Bihar state.
Bhatt told Sputnik, “There was no point paying monthly rent, flat maintenance charges and electricity bill of INR 20,000 ($266), when I lost my job. So, we vacated the premises and shifted to my parents’ house.”
Bhatt’s elder brother has a government job and his father is a pensioner from the state government.
Another resident from Noida, 37- year– old Sanjana Sharma (name changed on request) worked in a publishing agency before the pandemic. “I used to freelance with a publishing agency. Before the pandemic, there used to be a steady work flow. However, now there is no work from the company and my earnings have been reduced to nil", she said.
“Also, my husband’s salary has been cut in wake of the pandemic,” Sanjana told Sputnik.
Her family is earning almost INR 35,000 (about $466) less than what it used to earn before the contagion spread.
“With the reduced earnings for the past five months, I do not think we will regain the elasticity to spend on anything apart for essentials for the next two years,” Sanjana added.
Covid Times Altering Consumer Behaviour
So, is the pandemic incapacitating the Indian middle class, which has been one of the strong pillars of consumerism in the country's economy?
Economist Sunil Sinha, a director of public finance at India Ratings – a Fitch Group Company – told Sputnik, “Suppose a professional’s salary is intact. Even then, there is a behavioural change towards expenditure.”
“People are realising that much of the lifestyle expenditure is not essential. There is a realisation that a fair amount of expenditure was unnecessary, but people were doing it. The spending that was being done on clothes, dining out, and entertainment, is increasingly being considered as non-essential,” he added.
Covid-19: Body Blow to Indian Middle Class
Global management consultancy firm, Bain and Company, said in a report that it has compiled for the World Economic Forum last April, that at least 500 million Indians will be in the middle class by 2030, up from at least 360 million currently.
The report projected that the class will account for consumption worth $5.7 trillion by 2030, compared with $1.5 trillion currently.
That seems to be unlikely in the wake of the pandemic as indicated by the recent numbers from Centre for Monitoring the Indian economy (CMIE).
A July report from the CMIE says that middle income and higher income households have lost almost 30 percent of their incomes in the wake of the pandemic, compared with last year.
This corroborates with the job loss data released by the organisation recently, which says that almost 18 million salaried Indians have lost their jobs since April.
“Salaried jobs were estimated at 86.1 million in 2019-20. This fell to 68.4 million in April 2020. By July 2020, their count had fallen further to 67.2 million,” CMIE said in a report released last week.