Will Indians in Debt Trap After COVID Be Able To Come Out of It?

Expensive healthcare and limited penetration of insurance schemes are pushing COVID patients into long-term debts.

How COVID-19 is pushing people into long-term debt traps.

(Illustration: Erum Gour/The Quint)

A retired army man in Akola district of Maharashtra, a line engineer in an automobile factory in Uttarakhand’s Rudrapur, and an electrician in a village in Bihar’s Muzaffarpur might not know each other, but they have a lot in common. After the second wave of COVID-19 in India, all three have been pushed into a debt trap – that they will either take years to emerge out of from or never will.

In Maharashtra, Suresh Telgote’s 25-year-old son, Devananda, is in a critical condition at the time of publishing this article. A UPSC aspirant and IIT-Bombay graduate, Devananda showed COVID symptoms in late April and subsequently developed post-COVID complications, including lung and heart failure.

His sister Bindiya told The Quint that his treatment has, so far, cost Rs 1.3 crore. Of this, approximately Rs 1 crore was raised by Devananda’s friends via different fundraisers. The family has exhausted their savings and was forced to take loans from local moneylenders and relatives, as they pray for Devananda’s recovery.

This is not an isolated case. According to a report by the Reserve Bank of India, India’s household debt-to-GDP ratio rose to 35.4 percent in the first quarter and 37.1 percent in the second quarter of 2020.

Further, a report by the US-based Pew Research Centre estimated that the coronavirus pandemic has pushed about 32 million Indians out of the middle class bracket.

When the Poor Turned To Local Money Lenders, Relatives, and Sonu Sood

The above data explains why Ramu Mishra in Bihar is struggling to keep his wife Rinku Devi in hospital as she recovers from COVID-19. With a debt of Rs 3 lakh staring at him, Mishra says he has no work because of the pandemic and is at the mercy of his relatives and local moneylenders for his wife’s treatment.

“I am an electrician. I just make enough money to feed my family twice a day. There was no work during the pandemic and then my wife caught the virus. We had exhausted our savings by then. For her treatment, I borrowed money from some relatives and friends who lent it to me without interest, out of sheer goodwill.”

Ramu Mishra, Resident, Muzaffarpur (Bihar)

In fact, Mishra told The Quint that he asked for help on all social media platforms, including Facebook and Twitter. “Out of desperation, I even wrote a tweet to Sonu Sood because someone had told me that he is helping people like us, but my tweet probably never reached him,” he said.

Ramu Mishra sent out SOS calls to several people on Twitter, including actor Sonu Sood.(Photo: Accessed by The Quint)

Mishra further added that with the help of some volunteers he raised around Rs 80,000 through SOS calls on social media. “Several good samaritans came out to help my family. People donated whatever they could ranging from Rs 10 to Rs 10,000. We managed to make around 80,000 this way”

While social media did come to Mishra’s rescue, he still has a lot of debt on his head, which he says he will be able to repay slowly, over the years. “I might have to sell a motorcycle I bought a few years ago, though” Mishra said.

Ramu Mishra’s wife Rinku Devi caught COVID-19 in May, at the peak of the second wave.(Photo: Accessed by The Quint)

‘We’ve Mortgaged Our Gold, Government’s Compensation Could Have Helped’

Over 800 km from Muzaffarpur, Sandeep Mandal’s family in Uttarakhand’s Rudrapur was forced to pledge their gold and borrow money from a moneylender in their area.

A line engineer in an automobile factory by profession, Mandal told us that he earns Rs 12,000 per month and will have to put his future plans on hold to repay the debt.

“Our entire family caught COVID. We currently have a debt of around Rs 3 lakh on our head. Additionally, we have also pledged our gold to a local moneylender. How am I supposed to repay this loan with a salary of Rs 12,000 a month? Do you realise how many years it will take me to do that? I am the only earning member in my family now.”

Sandeep Mandal, Resident, Rudrapur (Uttarakhand)

Mandal lost his father to coronavirus on 11 June after which his mother’s condition became critical. He told The Quint that had the government stuck to its promise of offering ex-gratia to families who’ve lost someone to COVID-19, many of his problems would have been solved.

“Whatever happened cannot be undone, but had the government helped us financially, we could have thought of starting our lives afresh,” he said.

In Absence of Health Insurance, Fundraisers Emerged As Rays of Hope

Even as his condition remains critical, Devananda’s case in Maharashtra has been nothing short of a miracle as his friends managed to raise approximately Rs 1 crore for his treatment.

“Devananda developed several post-COVID complications and when doctors told us that his lungs have started failing and he needs to be airlifted to Hyderabad as soon as possible, we knew that we will have to do something,” his friend Shubham told The Quint.

Shubham, along with other friends of Devananda, was able to raise the amount with the help of IIT-Bombay alumni and other people in their circle. However, Devananda’s sister Bindiya feels that this happened by chance and had it not been for the fundraisers, her brother wouldn’t be alive today.

“Even as we pray for Devananda to recover, I feel nobody deserves to be treated like this. Medical expense of more than Rs 1 crore is outrageous for a middle class family. I don’t even want to image a scenario where the fundraiser wouldn’t have worked. Where would we be then? Where would my brother be?”

Bindiya Telgote, Akola (Maharashtra)

Devananda Telgote with his father and mother.

(Photo: Accessed by The Quint)

The Quint asked Bindiya, Ramu Mishra, and Sandeep Mandal, if they think that having a health insurance cover could have provided some relief to them in these times and while their responses varied, we learnt that none of their family members had any kind of insurance protection.

While Mishra said that he never saved enough to invest in an insurance cover, Bindiya and Mandal said they never thought a tragedy like this will strike their families.