COVID-19 impact: Indian households spent more on food, less on healthcare during first lockdown

One year on, the effects of the COVID-19 pandemic continue to linger. Even as India climbs back to the top of surging daily new cases around the world, there is fear and worry over the economic effects of another lockdown. This is particularly the case with Maharashtra, which leads other states in terms of new cases.

However, even as we stare down the barrel of a “second wave” and a second lockdown, data on the immediate, short-term impacts of the previous lockdown need examining.

Since June 2020, many studies have suggested that the onset of the COVID-19 pandemic in India was followed by disruptions to the food supply chain, large levels of unemployment (especially for informal workers), and an increase in vulnerabilities for migrant workers and gendered violence at home, among others.

One of the main sources of useful data on household changes following COVID-19 comes from the Centre for Monitoring the Indian Economy (CMIE). Their Consumption Pyramids dataset, collected meticulously despite the severe challenges to researchers posed by lockdown restrictions, has been used to illustrate some of the effects of the pandemic and subsequent lockdown.

Unlike various other datasets, the Consumer Pyramids database tracks the same households between June 2019 and June 2020 in both rural and urban India. This affords researchers a much closer look at changes in household expenditures on various dimensions.

First, and in general, there was a decline in household expenditures in both rural and urban India between April 2019 and October 2020. This report by the Centre for Economic Data and Analysis at Ashoka University shows that household expenditures declined by up to 35 percent in April 2020, the first month following the nationwide lockdown.

A large part of this slowdown in expenditures is attributed to changes in income, as described in the same report. However, what is yet to be fully understood is how households have rejigged consumption of different types — especially healthcare following the COVID-19 outbreak.

The figure below illustrates a box plot of changes in total household expenditures between June 2019 and June 2020 using the CPDx household survey data.

Unlike the data reported before, this shows changes in monthly per capita consumption expenditure at the level of the household. Notably, the lower bound (ie, the 25th percentile) is marginally higher following the pandemic, but consumption at higher levels (at the median, shown by the line in the middle of the box, and the 75th percentile at the top of the whisker) have reduced overall in both rural and urban samples.

This reduction in total expenditure is accompanied by a similar decline in their share of health expenditures to total as compared to the pre-pandemic period.

At the baseline (i.e., June 2019), households spent only about 4 percent of total expenditures toward health and health-related items (eg, health supplements, doctor visits). In June 2020, data shows a 1 percent further reduction in the overall share of health expenditures in the total for both rural and urban households.

Although small or marginal, this change in health expenditures could have been directed toward ensuring prioritisation of other types of expenditures, such as food. Moreover, data from pharmacies in some Indian cities indicated a large upswing in the purchase of personal protective equipment (PPE) such as masks as well as other medications, which is perhaps not borne out in this data. This reduction is also in line with what was observed in other countries such as Singapore, where doctor’s visits and out-of-pocket health expenditures reduced sharply following the pandemic.

Does the reduction in overall household per capita expenditures also mean changes in expenditures related to food?

Given that food insecurity has been flagged as one of the major fallouts from the pandemic, the data from CMIE provides adjusted monthly expenditures for food (which takes into account both weekly as well as monthly variations in expenditure reporting). However, to truly understand changes in food expenditures, we must view them in the context of the changes in overall expenditure as well.

The plots below show the changes in food consumption expenditure (per capita) in June 2019 and 2020, as well as the shifts in their share to total expenditure (which from the above figure, we know has reduced in light of the pandemic).

Overall, food expenditures per capita have reduced only marginally (approximately 7 percent on average in rural areas and by 8.5 percent in urban areas in raw terms). This change for urban areas was from Rs 1,789 in June 2019 to Rs 1,638 as of June 2020 for food expenditure per capita.

In both urban and rural households, the share of food to total expenditures went up by 8 percent approximately between June 2019 and 2020. This could be on account of changing prioritisation of food expenditures following the lockdown and eventual relaxing of restrictions by June 2020.

Given that pandemic-related restrictions may have ruled out specific activities (eg, travel), it is likely that households changed their expenditure patterns to better fit in with post-lockdown restrictions.

The data from CMIE points to variations in household expenditures, particularly related to food and health following the COVID-19 pandemic. Although there has been substantial work by policymakers as well as researchers to understand the food security concerns (particularly for marginalised groups such as migrant or informal sector workers), there is less work on accessing health care and health expenditures following the COVID-19 pandemic.

If India is working to build resilient health systems as well as boost public health spending in the future, it is important to understand underlying patterns in household health expenditure first.

Separate, targeted policies can be framed for rural and urban India to ensure that the already high out-of-pocket health expenditures do not heavily burden society as India moves into a “second wave” of new COVID-19 cases.

The author is with the Department of Economics at Monk Prayogshala, Mumbai