Impact of COVID19 on preferences of household portfolios: Case of low-income migrant households

The COVID-19 pandemic- wave-1 and the subsequent lockdown was challenging for all. However, the migrants had it worst, with the sudden loss of jobs, while being stranded away from home with little to no support along with the travel restrictions where they could not return to the safety of their homes. International Labour Organization estimated that about 400 million people were at risk of falling back into poverty, and the consequent negative coping mechanism would result in deepening poverty.

This event highlighted the need to better understand their preparedness, their household portfolio, and decrypting their risk mitigation strategies and coping mechanisms to tide over socio-economic vulnerabilities. This research is envisaged to inform future programming and help design policies and products to better cater to low-income migrant households’ needs and build resilience.

Research Abstract:

This research presents a snapshot of the financial portfolio of low-income migrant households in Nawada, Bihar, and explores the impact of COVID-19 on their financial behavior. Domestic migration is a prominent livelihood strategy for low-income households in rural India. The Census (2011) estimates that there are 45 million internal migrants in India. However, there is an evidence gap for a detailed understanding of these households’ asset allocation and risk mitigation strategies. The mixed-method research design for the study includes a cross-sectional survey and participatory research methods. The findings suggest that the assets of migrant households are largely locked in physical assets. The income of migrant households relied heavily on remittances and declined significantly, post COVID19. The expenses of these migrant households also witnessed an increase and resulted in stress on their savings as sixty-eight percent of households reported a decrease in their savings, while the reliance on credit increased. Limited uptake of social security products exacerbated their weak financial situation. The study results suggest the need for diversification of income assets and call for customer education beyond savings to improve the financial resilience of low-income migrant households.

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Authors: Gaurav Kumar Sinha, Rahul Ranjan Sinha

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