Covid-19 second wave pushes vulnerable groups into debt traps

FOR IMMIDEATE RELEASE

New Delhi/Kolkata, June 30, 2021: Covid-19 induced lockdown and the after effects of the ongoing pandemic continues to impact low-income households across the country. However, the economic distress brought on by the pandemic seems to have a long-lasting impact on people belonging to vulnerable and economically weaker sections of the society, according to an analysis done by Tafteesh.

The analysis of income and loan information of 335 survivors of human trafficking, commercial sexual exploitation and sex workers from West Bengal, Chhattisgarh and Andhra Pradesh has found that 201 or 60% of them have taken some loan at a time of this study in May 2021 to cope with their financial difficulties created by the pandemic and lockdown.

It appears that people belonging to this vulnerable section have far more been hit economically during the second wave, believed to have started in India around March, than in the first wave when they have at least accessed to free ration and cash support provided by the State and Central governments. However, this time around, the Government’s focus was mostly to strengthen the healthcare system which somehow deprived this section of people of accessing to PDS and their need for food for sustenance without much or no income pushed them to turn to high-risk loans available in their vicinity.

Of the 201 who had taken loan, 123 or 60% have taken high-risk loans which is much beyond their paying capacity and family income. The average monthly minimum requirement reported by the study respondents was about INR 6,300, while more than 30% (or 102) families reported that they had no income during the second phase of the pandemic.

Furthermore, the study revealed that Banks or Microfinance Institutions (MFIs) have not relaxed the repayment schedule or set any moratorium period for their repayment at this time of cash scarcity among the vulnerable groups.

The study also revealed that a significant proportion of them took new loans to repay the existing loans, which indicates debt traps, which has in turn increased their risk of becoming indentured labour and victims of trafficking.

Another important learning from this analysis is that women are particularly at the risk since they are at the front of all their family debts, and they are likely to be sued for defaulting in repayments or subjected to harassment by the moneylenders and their recovery agents.

The analysis also showed that the pandemic and accompanying restrictions have aggravated the economic condition of women in sex work who have been in already precarious situation being outside of the social protection mechanism.

During this period, their debt amounts have increased exorbitantly. Out of the 142 survivors of commercial sexual exploitation and women in sex work analysed for the research, 99 have taken loans ranging between Rs. 5,000 and Rs.550,000 during the second wave.

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Tafteesh is a platform for anti-trafficking stakeholders including lawyers, researchers, psychologists, social workers and survivors of trafficking. For more information, visit: www.tafteesh.org  

For any query, please contact

Snigdha Sen, Email: Snigdha@kamoin.org | +91 94333 94027
Saroj Kumar Pattnaik, Email: sarojskp1@gmail.com |+91 9910452820