Indira Rajaraman: Reduce uncertainty at the base of India’s pyramid

For people at the base of the pyramid, cross- border threats just add to everyday uncertainties. These are plain ordinary uncertainties, unconnected to job threats from artificial intelligence or tariff threats to export sector jobs. In urban India, dwellers in informal settlements live under the  perennial threat of eviction. As gross domestic product (GDP) goes up, and with that urban real estate values, eviction possibilities increase. 

Service shacks in upscale localities supplying tea and other essentials operate under the threat of demolition, a threat directly proportional to their success. 

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After six decades of research on poverty, to which I was an early contributor, we really know very little about coping strategies at the base of the pyramid. There are those who are poor with stagnant incomes but stable. There are those whose  fortunes fluctuate, accompanied most usually by locational uncertainty. 

I have researched the mutual insurance function of groups which put together a uniform monthly sum and allocate these pots sequentially to all members according to need (the highest bid). But these require locational stability among group members.

The spread of education and smartphones offers roving gig-work possibilities (given its ease of entry and exit) in urban centres. The common gig options are food delivery, guarding residences and personal health care. A 2023 paper by Bornali Bhandari and co-authors (confined to food delivery) shows that gig workers have more years of schooling than the average urban worker in the same age cohort; earn higher wages (uncorrected for the difference in education); but work longer hours. What happens to those higher gig earnings? 

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The explosive growth of digital payments has meant easier transfers of money than previously possible. Paradoxically, this very ease may have lowered control over earnings for gig workers. A median monthly gig earning of ₹20,000 is 40 times the annual income support of ₹6,000 received by a farming family under the Pradhan Mantri Kisan Samman scheme. 

Enlarged earnings should normally be saved, as theory suggests. Gross household financial savings as a percentage of GDP should have risen, but are actually lower, by the latest data for three post-covid years from 2021-22 to 2023-24 (average of 11%), as compared to the three pre-covid years from 2017-18 to 2019-20 (average of 12%). Of course, the aggregate percentage is substantially shaped by the upper income deciles.

The deployment of the gig earning spike is typically decided by a family patriarch. It can go towards coaching fees for a brother for entrance examinations to professional schools (a gamble, as the success percentage of coaching centres is dismally low). 

It can go towards health expenditures for family, extending to remote kin, where such assistance can dissolve later into fractious disputes. Weddings are another sink into which earning spikes disappear irretrievably. Even engagement events in urban informal settlements, to which rural relations of the groom demand to be transported at the expense of the bride’s family, can be a financial wipe-out. 

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A respondent to a Consumer Confidence Survey (CCS) would report these as ‘essential,’ because that is how they are perceived. That is congruent with tabulated findings of the unit-level data from the January 2025 CCS by Roshan Kishore. The monthly earning class of ₹10,000-25,000 (the gig earning range) has the largest percentage reporting an increase in ‘essential spending,’ despite a higher proportion reporting an income decrease relative to those reporting an increase, over the previous year.

These claims periodically erode the gig worker’s financial certainty and deny an overall sense of advancement. The ‘JAM trinity’ (Jan Dhan bank account-Aadhaar-mobile) that activated the base of the pyramid also enables family obligations. 

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Several initiatives such as Ayushman Bharat have relieved to some degree the pressure from exogenous health shocks. But one type of health shock is totally preventable: the kind arising from traffic accidents, particularly from the failure to enforce helmets among two-wheeler riders. A 2024 report on road safety from the Transportation Research and Injury Prevention Centre at IIT Delhi shows that on urban roads, helmet usage among two-wheeler drivers was below 50% in five states, and among pillion riders below 50% in all but two states. In rural stretches including highways, helmets are largely non-existent. Popular movies like Three Idiots popularized  helmet defiance.

Enforcing helmet usage is doable. It will reduce the crush of patients in trauma centres and raise household financial savings by protecting new labour-force entrants from essential expenditures on family health claims. Enforcement will work only if, like vehicle insurance, helmet protection is made a requirement for vehicle use.

Nothing prevents us from doing the best we can within our borders to reduce uncertainty by eliminating preventable accidents and injury. A helmet on a pole is a poignant symbol of a fallen soldier. A helmet on a head can equivalently be a symbol of a state that protects its people.

The author is an economist.