The coronavirus pandemic may have reduced India’s middle-class population by 32 million and brought 75 million below the poverty line in 2020, according to a report from the Pew Research Center, as a severe recession hit the third. Asia’s largest economy.
The report, which is based on an analysis of World Bank data, said that China fared much better by comparison, with the number of people at the middle-income level declining by just 10 million, while the level poverty remained virtually unchanged in 2020.
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“Given that India and China also account for more than a third of the world’s population, with around 1.4 billion people each, the course of the pandemic in these two countries and the way in which each recovers will have a substantial effect on changes in income distribution. globally, “the report said.
India plunged into its deepest recession in more than 40 years when the pandemic led to massive job losses, while China was able to avoid a contraction. In its World Economy Update released in January, the International Monetary Fund estimated that India’s economy would contract 8% in fiscal year 21, while China’s economy was expected to expand 2.3% in 2020. The pandemic could partially reverse India’s previous success in substantially reducing poverty, but the reduction of the middle-class population that drives consumption in the country could have a medium-term impact on the growth trajectory of the India.
Before the pandemic, 99 million people in India were anticipated to belong to the global middle class by 2020. One year after the pandemic, this number is estimated to be 66 million, reduced by a third.
Meanwhile, the number of poor in India is projected to reach 134 million, more than double the 59 million predicted before the recession. “The poverty rate in India likely rose to 9.7% in 2020, well above the January 2020 forecast of 4.3%,” said Pew Research.
The research agency divides the population of a country into five groups: poor, low income, middle income, upper middle income and high income for its analysis. The poor live on $ 2 or less a day, low income with $ 2.01- $ 10, middle income with $ 10.01- $ 20, upper middle income with $ 20.01- $ 50 and high income with more than $ 50 .
Separately, the United Nations Conference on Trade and Development (UNCTAD) in a report released Thursday said that developing countries have experienced some of the worst falls in personal income relative to gross domestic product (GDP). due to the pandemic and that government actions will at best lead to an uneven K-shaped recovery within and between countries.
“In countries where poverty levels are already high and a large part of the workforce is working in informal jobs, the immediate impact of even a small recession on economic activity can be devastating, and the World Bank estimates that 250 billion More people are reduced to poverty (with a daily reference value of $ 3.20) as a result of the pandemic, “said UNCTAD.
Pew Research made the caveat that the estimates are subject to a degree of uncertainty based on the real growth of the two economies and the effectiveness of social spending by governments during the COVID-19 recession. “If the Covid-19 recession has worsened inequality, the increase in the number of poor is likely to be greater than estimated in this analysis, and the decrease in the number of people with high incomes is likely to be less than estimated. The middle class may have shrunk more than projected, “he said.
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