Working Papers

Kerala?s economy is primarily reliant on service-sector salaries and offshore remittances. Notably, pre-pandemic remittances accounted for around 15% of the state?s GDP. Subsequent to the pandemic?s onset, the state implemented stringent containment measures, including 20-day ?triple-lockdowns?, which effectively contained the virus but significantly reduced economic activity. This paper examines the impact of COVID-19 on household income and its recovery from the first quarter of 2019 to the first quarter of 2022 (2019Q1 to 2022Q1), utilising data from the Consumer Pyramids Household Survey (CPHS). The comparative analysis indicates that Kerala?s income trajectory was among the worst in India, with median household income declining by 54.5% during the lockdown compared to a 37.9% drop nationwide. By mid-2022, income levels in Kerala remained below those of other states. Furthermore, while other states saw a V-shaped income recovery post-pandemic, Kerala underwent a double-dip during the second wave, resulting in a W-shaped recovery. Kerala?s economy, characterised by reliance on labour income from informal sectors and remittances, experienced a disproportionate impact, while states with more diversified income sources rebounded faster. The findings indicate that Kerala?s unique labour-income structure and stringent COVID-19 response resulted in a disproportionately severe impact and sluggish recovery.