Context:

COVID-19 has exacerbated the economic slowdown in India, thus leading to a rise in poverty in the Indian population.

Trends in Poverty:

• Increase in Absolute Number: According to Pew Research center (which has compiled the results based on World Bank data), poverty in India (Number of people earning less than $2 per day) has doubled from 6 Crore to 13.4 Crore during the last one year.
• Country of Mass Poverty: This is the first interruption in India’s progress towards decreasing its poverty rate since the economic progress gathered pace in the 1970s. With the fall back of this huge chunk of people back to poverty, India has again fallen back into the list of ‘countries with mass poverty’.
• Reversal of the Trend: India has performed well in recent times in terms of decreasing poverty, with the number of poor decreasing by 27 Crores from 2006 to 2016 (according to Multidimensional Poverty Index). The last time, the number of poor increased in India was just after independence. From 1951 to 1974, the share of poor in the total population increased from 47% to 56%. Therefore, reversal of this trend is not welcome news for Indian society.

Impact of COVID-19 on Poverty Estimates in India

Table 1. Estimates of Poverty at 5% and 10% Contraction in Consumption for Rural and Urban India, 2020–2021.

Table 1 presents our estimates of headcount ratios and an absolute number of poor based on the two assumed scenarios of contraction in per capita consumption separately for rural and urban areas. The table shows that the total number of people living below the poverty line would expand by 150 to 199 million, reaching to an absolute number of 508 to 556 million due to the COVID-19 crises. Our estimates suggest that a 5% and a 10% level of contraction in consumption in the rural area would lead to an additional influx of 115 and 152 (population in million) respectively into poverty. This means a 15.38 and 20.35% increase in poverty incidence at the 5 and 10% consumption shock respectively. In pre-COVID times, around 35% (265 million people) of the rural population were poor.

Must Read: Multidimensional Poverty Index:

The FY2021-2022 is expected to witness a rise to roughly 381 to 418 million for this number. For Urban India, under the same levels of contractions, there is an expectant 36 to 47 million additional people to fall under poverty, with the total headcount ratio reaching 39.08% to 42.4%. The contractions would lead to an increase in urban poverty incidence by 10.96% and 14.2%. The COVID-19 crisis will force the all-India level into pushing an additional 150–199 million people into poverty, while it will push those who are already poor even deeper into poverty.

Table 2. Estimates of Poverty at 5% and 10% Contraction in Consumption Across Caste for Rural and Urban India, 2020–2021.

In the pre-COVID-19 period, approximately 52% of individuals in the ST category, 40% in the SC category, and 24.44% in the ‘other category’ group residing in rural areas were classified as poor. Similarly, the urban sector exhibited a higher prevalence of poverty among SCs (41.69%) and STs (39.57%) compared to individuals in the ‘other category’ (18.54%) during the same period.

Post-contraction, a similar trend persists, with a significantly higher proportion of the SC/ST population expected to experience poverty due to job and income loss resulting from the COVID-19 crisis. Table 2 illustrates that the ‘other category’ population is expected to have a poverty rate ranging from 30% to 43%, while the SC/ST population is anticipated to experience poverty at a higher rate, ranging from 55% to 70%.

Other Factors exacerbating Mass Poverty in India:

Economic Slowdown:

Even before the pandemic struck, India was witnessing a general slowdown in economic activity as a result of the ongoing global economic recession. The progress in uplifting its population out of poverty that India was showing was expected to be impacted. However, the pandemic has exacerbated this trend, leading to a further slippage of many people below the poverty line.

Migrant crisis:

 As stated above, it was the poor daily wage earners who suffered the maximum during the COVID-induced lockdown. After emptying their savings, they were kicked out of the rental houses, only to find means of transport unavailable, resulting in thousands of miles of walk back home. The event has exposed the chinks in the social security system of India.

Social Security:

The migrant workers lack access to formal employment, thereby also to the social security system. This means they have no pension, no holidays, no insurance to tide over the life emergencies. COVID-induced lockdown not only meant loss of income, but tapping into meagre savings and sometimes, medical emergencies. Thus, COVID increased the expenditures, without a commensurate increase in the income level, pushing more people into poverty.

Food Inflation:

 Despite government assurance, logistics suffered from the confusion created by the lockdown. This was further worsened by the increasing fuel prices globally. Therefore, in the absence of a proper supply mechanism and hoarding by some traders, food prices have increased. Increased expenditure on food by the lower strata, without a corresponding rise in income, has led to increased poverty.

Hidden Hunger:

 Due to increased food inflation, many families had to cut on expensive items and revert to eating basic cereals. This erases the gains made by society in improving the nutritional status of the children, thus leading to increased prevalence of malnutrition. This is also referred to as hidden hunger.

Conclusion

The economic recovery is expected to elevate the economic status of those who have recently fallen below the poverty line. However, with the current reports of scarce resources and prevalent maladministration, this might prove to be a herculean task. The need of the hour is to arrest the spread of the pandemic along with ensuring an adequate supply of required resources, with an eye on the future of daily wage earners.

Read also:- Poverty Estimation in India