COVID-19 pandemic, which triggered the global health crisis, has pushed millions of people in India out of the middle class or into poverty. According to a report by Pew Research Centre, India is estimated to have seen a greater decrease in the middle class and a much sharper rise in poverty.
It says that the middle class in India is estimated to have shrunk by 32 million in 2020 as a consequence of the downturn, compared with the number it may have reached absent the pandemic. This accounts for 60% of the global retreat in the number of people in the middle-income tier, which is defined as people with incomes of $10 to $20 per day.
The number of people, as per the analysis, who are poor in India with incomes $2 or less a day, is estimated to have increased by 75 million because of the COVID-19 recession. This also accounts for nearly 60% of the global increase in poverty. The number of poor in India is projected to have reached 134 million, more than double the 59 million expected prior the recession. The report highlights that the poverty rate in India likely rose to 9.7% in 2020, up sharply from the January 2020 forecast of 4.3%.
The drop in living standards in 2020 is a sharp departure from recent trends. From 2011 to 2019, according to Pew Report, the number of poor in India is estimated to have decreased from 340 million to 78 million. The projected rise in poverty in 2020 when comparing pre-pandemic and revised figures, 75 million, claws back several years of progress on this front for India.
Moreover, the retreat of India’s middle class, in 2020, by 32 million also looms large in the context of the addition of 57 million to this income tier from 2011 to 2019. The pandemic is estimated to have erased a year of growth, leaving the middle class population vulnerable.