ABSTRACT
Covid-19’s outbreak resulted in a nation-wide disruption of economic activity. Using data collected by CMIE, Consumer Pyramids data, we discuss the effects of the Covid-19 outbreak on household consumption and its constituent components in this chapter. We describe how income and consumption patterns of households adjust when facing an economy-wide lockdown. We focus on the extent of income smoothing that was possible across different socio-economic groups to understand the nature of risk-mitigating behaviour that households had access to. Finally, we utilize MGNREGA data on household demand for labour and availability of work under India’s employment guarantee act to describe the extent of distress faced by rural households. This allows us to provide a comprehensive narrative of household income and consumption adjustments in response to the outbreak of Covid-19. One takeaway based on the current data available is a sudden and rapid increase in inequality during the lockdown.
