According to the Pew Research Centre report, the pandemic has had an immense impact on the middle-class population of India, shrinking by 32 million and bringing 75 million people under the poverty line in the year 2020, mainly due to the major recession that hit Asia’s third-largest economy. According to a report that was based entirely on the analysis from the world bank data explained that China showed much better results, as compared to India, with only 10 million people degrading from the middle-income tier and the poverty level that stayed virtually unchanged in the year 2020. It is a fact that India and China together contribute to about one-third of the total global population, having a population of about 1.4 billion each. The impact of the pandemic on these two countries and how they deal with and overcome the situation will have a huge impact at the international level in terms of the distribution of income, as mentioned by the report. India has experienced its sharpest recession in more than 40 years as the pandemic hit various economic sectors leading to huge job losses whereas, on the other side, China was successful at preventing an upcoming contraction. As observed in the World Economic Update, released by the International Monetary Fund in January, suggested that India’s economy is expected to contract by 8 percent in the Fiscal Year 2021 whereas China’s economy was expected to expand by 2.3 percent in the year 2020. The pandemic has had a minimum impact on the growth of India in terms of reducing poverty, but this shrink in the middle-class population of the country, which is responsible for driving the total consumption in the country, might have a medium-term impact on the growth of Indian trajectory.
According to the reports, before the Coronavirus pandemic hit the world, it was expected that 99 million people from India will belong to the global middle class in the year 2020. Coming to now, a year into the pandemic, the number is expected to cut by one-third, amounting to 66 million people belonging in the middle-class category. Also, important to note here is that the number of poor in India is reported to have reached 134 million, more than double the number expected before the recession, which was 59 million. According to the report by the Pew research, the poverty rate that was expected to be 4.3% in January 2020 has surged up to 9.7 percent in 2020. As explained by the research agency, for analysis, the population of the country is divided into five groups, namely,
2. Low income,
3. Middle income,
4. Upper-middle income, and
5. High income.
The poor people are said to be living on 2USD or less every day, whereas low-income people thrive on a range of 2.01USD-10USD, middle-income people on a range of $10.01-$20, upper-middle-income people survive on a range of $20.01-$50, and high income lives on more than 50 USD.
On a completely separate note, according to a report which was released on Thursday, the United Nations Conference on Trade and Development (UNCTAD) explained that developing countries (which includes India as well) have witnessed few of the worst drops in the personal income related to the Gross Domestic Product (GDP), the main reason being the pandemic and the actions taken by the government will lead to best K-shaped recovery within the countries as well as across the countries. India is one country that is already struck hard by the high poverty levels and a large part of our labor population works in the informal sectors, therefore an impact of the pandemic on economic activities can be devastating, considering the estimate made by the World Bank that a quarter of a billion more people shifting in poverty, as said by UNCTAD.
Pew research has made it clear that these reports are subjected to change and involve a degree of uncertainty with them in terms of the actual growth of the two economies and the social spending which is carried out by the government during the pandemic. Like, if the recession worsens, the increase in the number of poor people will mostly exceed the number that is expected and the number of people with high income will most likely decrease as compared to the number estimated, also the number of the middle class may shrink even more than expected.
Poverty In India
The population of poor people in India is more than 800 million people now. Most of these poor people are surviving with the help of odd jobs and the lack of employment in the country is compelling these people to move into metropolitan cities such as Bombay, Bangalore, Kolkata, and Delhi. After moving to such cities, these people have to live in slums that are made up of corrugated ironworks, which have insufficient drinking water supply, rarely have a garbage disposal and in most cases, do not have proper electricity supply. These conditions along with poor hygiene lead to conditions such as typhus, cholera, and many other diseases due to which a lot of people including their children suffer and die.
Increasing poverty in any nation is a cause of concern. For India, it impacts the people and their families in many different ways in terms of High infant mortality, Child labor, HIV / AIDS, Lack of education, Malnutrition, Child marriage, etc.
Middle-Income Segment In India
According to our Finance Minister Nirmala Sitharaman, the middle-income segment is described as people whose income below Rs. 18 lacs per year and are considered as above the poverty line. Before the mid-1990s, these were the characteristics of a person belonging to the middle class:
1. A person who is educated enough to get a white-collar or blue-collar job, a person who can speak, read and write at least two languages.
2. a religious person, believes in celebrating festivals with great enthusiasm, speaks on issues relating to patriotism, religion, displays herd behavior.
3. A person who is a law-abiding citizen
4. A person who is committed to providing better education to his children
and many other characteristics.
Now when we look at it, our definition of middle-class is so much different from what it used to be. The size of the middle class has always been an important topic for every nation’s economy. So measuring the population of the middle-class becomes equally crucial than any other step in determining the country’s economy.