India, in pandemic, contributed to 60% rise in global poverty in 2020: Report

With the outbreak of coronavirus pandemic, India’s middle class is estimated to have shrunk by 32 million in 2020, which accounts for 60% of the global retreat in the number of people in the middle-income tier. According to a new study, the pandemic and economic slowdown are forcing people from the middle class into poverty. In comparison, China remained untouched with just a 2% drop in the middle-class population.

What makes India and China global contributors? Since India and China account for more than a third of the population, worldwide, with about 1.4 billion people each, how each of the countries recovers will have an effect on changes in the distribution of income.

In January 2020, World Bank forecast stated that there was the same growth in the real gross domestic product (GDP) in India (5.8%) and China (5.9%) in 2020, a new Pew Research Centre study said.

One year into the pandemic, World Bank revised the estimates downward to -9.6% for India and 2% growth for China in January 2021.

India’s vast majority of middle-class population shrank from 119.7 crore to 116.2 crore. Out of which about 3.5 crore dropped below the poverty line. However, in contrast, China’s middle class witnessed a small drop of just 1 crore.

In the report, Pew said that the situation might be worse than what they are expecting it to be. “The methodology in this analysis assumes that incomes change at the same rate for all people. If the COVID-19 recession has worsened inequality, the increase in the number of poor is likely greater than estimated in this analysis, and the decrease in the number who are high income is likely less than estimated. The middle class may have shrunk by more than projected,” the report added.

The study also showed the number of poor people in India (with incomes of Rs 146 or less a day) grew by 75 million because of the COVID-19 recession. This, too, accounts for nearly 60% of the global increase in poverty.