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EXPLORING THE SOCIO-ECONOMIC IMPLICATIONS OF COVID-19: SURGE OF POVERTY AND INEQUALITY IN INDIA

Author: Rinta John, I year from Central University of Rajasthan, Ajmer, Rajasthan.


Abstract

The outburst of Covid-19 has distorted the global order and altered the social and economic lives of all the individuals. This article examines the impact of various socio-economic and political factors that have led to the severe cash crunch. India witnessed a sharp increase in unemployment and economic instability even though it boasted a majority government in its pre-pandemic days, and after the first and second-wave strokes, India is going through a much more severe crisis, with the new burden in the form of the pandemic.


The worries can probably be the safety of lives, financial security with the loss of jobs, availability of food, etc. This seems justifiable in the context of the mass exodus of the migrants in search of livelihood and securing their lives. Some time ago, politician and author Shashi Tharoor insisted that “India is not, as people keep calling it, an underdeveloped country, but rather, in the context of its history and cultural heritage, a highly developed one in an advanced state of decay.”


Although Covid-19 has provided some recent prospects for India, with people moving on to other jobs or establishing their own business at the microeconomic level to the government adopting the ‘Make in India’ model which is argued to create stirring economic growth in the economy, the Indian economy which was already suffering a sharp slowdown, needs more stringent measures.


Introduction

The decade saw the decline of the global traditional social order with the weakening of the global institutions like the United Nations Organization and the emergence of new institutions, primarily same-regional institutions on self-benefit and self-interests, such as the RCEP. But the pandemic transformed the whole scenario, with the nations struggling to manage their resources, protect the citizens and bring back the economy to normal.


The never-experienced-before crisis also reflected the questionability of the framework of India’s social security nets.

According to an analysis by the Pew Research centre, the Indian middle class has been shrunk by a third due to the recession followed by the pandemic, while the number of people who have been earning less than meagre income for survival, about 150 rupees per day, doubled.


Also, it was estimated to have increased from 6 crores to 13.4 crore poor people, with earnings of Rs 150 daily or lower, which accounts for about nearly 60 percent of the increase in poverty. Also, the record rise in MGNREGA workers showed that people were in dire need of jobs. But it has also been speculated by Pew that the reality can be far worse, with the inequality being actually worsened, there can be an increase in the number of poor people than estimated. Also, according to the estimate by Brookings in India, more than 100 million people may have entered extreme poverty.


Factors and Implications of Covid-19 in the increase in poverty in India

The Annual Status of Education Report exposed some alarming facts, as many young children haven’t joined school, and there is a sharp increase in out-of-school children in the 6-10 age group. only a little under a third of India’s schoolchildren could access online education, say about 11% and of these, the share of those in government schools was 8.1%. The existing deep digital divide in society based on gender, region, and financial aspects has been disturbing. While the have-nots have been struggling to meet their ends and survive, education is their least bother.


All these could lead to a huge loss of human capital accumulation that is more harmful to the economy than economic loss. In India, it will worsen already widening social and economic inequalities, irreversibly. Also, it was highlighted in the Annual Inequality Report by Oxfam India in 2020 that the lives of Indian women are negatively influenced by the influence of gender, caste, and class.


'The economic argument in favour of women’s paid employment was that if India’s female formal labour force participation rate was the same as China’s, then India’s GDP was steady to grow at 27 percent’ .


Accordingly, the problems of inequality and poverty cannot be addressed without fixing all these interrelated issues. Government schools provided mid-day meals in India that the less privileged students were benefitted during the pre-pandemic days and ensured food and education; but the pandemic denied their source of nutrition. According to the findings of the Right to Food Campaign, it was found that the disturbances in Anganwadi schemes due to the pandemic have deprived 6.4 crore children of their right to food.


According to the report by the International Labour Organization, there are great working hour losses due to the pandemic. As it states, “Eastern Asia suffered great loss during the first quarter, when it was hit with the coronavirus in 2020, but recovered rapidly. In contrast, the rest of the Asian region experienced large losses during the second quarter, as a consequence of the strict containment measures implemented across the region, followed by a strong recovery. Southern Asia in particular (driven by India) exhibits this trend, registering a loss of 34.5 percent in the second quarter, and one of 9.9 percent in the third quarter. The two largest countries in the region, China and India, registered estimated annual average losses of 4.1 percent and 13.7 percent, respectively”.


In April 2020, ILO had claimed that about 400 million workers in India’s informal sector are likely to be pushed deeper into poverty due to Covid-19 and called out the catastrophic consequences of the pandemic as “the worst global crisis since the Second World War”. There is no doubt that the period is of great economic and social challenge, but it is to be noted that the volume of new poor might swell rapidly if the situation isn’t tackled efficiently, as the gap between the haves and have-nots is rapidly widening.


The World Bank referred to this as the surge in the “new poor". The job insecurities and low income made it tough for domestic workers and daily wage workers who face the pandemic along with the already existed, yet an increased level of social exclusion and ignorance.


This grievance is particularly relevant in developing countries like India, where the majority of the population works in the informal sector for their subsistence and is highly volatile to crises, to economic devastation due to the absence of a regular income stream leading to a surge in joblessness.


For India, even before the pandemic struck, most of the population was living dangerously close to the poverty line. The pandemic has indeed amplified Asia’s third-largest economy’s woes, struggles, and vulnerabilities, but the crisis could’ve been managed better if the economy was better functioning.


When the Moody’s assessment downgraded India’s credit system from Baa2 to Baa3 in June 2020, with a negative outlook, which was cited due to the weakness in implementing reforms, sustained low economic growth momentum, weak private sector investments, worsening government finances, and dull job creation since 2017.


So, it seems that poverty and inequality were at the doorsteps during the pre-pandemic days, and the breakdown of the nation and its deterioration cannot be completely blamed on the pandemic. It is only that the pandemic can lead either to a bleak or a dynamic future, which depends on how the nation reacts to the conditions.

But, in March 2021, Moody’s estimated India's economic growth at 12 percent in 2021 following a 7.1 percent contraction in 2021. As stated, near-term prospects became more favourable and a stronger than expected December quarter GDP growth of 0.4 percent following a 7.5 percent contraction in the previous three months has turned India's near-term prospects more favourable. As per the UNCTAD report, India is estimated to record a 5 percent GDP growth in 2021. Also, as the Prime Minister Narendra Modi held, the Covid-19 pandemic will remain the watershed moment in history—and let it be the beginning of the effective implementation of policies and survival that India can regain its vigour. It is high time for the need for revitalization of India and its citizens, and this can be summarized by the following quote;

There is empirical evidence that living in unequal societies with some people being much worse off, economically and socially, tends to produce deprivations in the absolute quality of life that people enjoy.”


References

https://www.indiatoday.in/business/story/covid-19-poverty-doubled-in-india-in-2020-will-second-wave-make-it-worse-1793826-2021-04-22

https://www.thehindu.com/news/national/coronavirus-pandemic-may-have-doubled-poverty-in-india-says-pew-study/article34110732.ece

https://www.nationalheraldindia.com/india/six-million-children-out-of-school-in-india-due-to-the-impact-of-covid-19-girls-most-affected

https://thewire.in/education/nhrc-covid-19-schools-midday-meals

https://economictimes.indiatimes.com/news/economy/indicators/indias-economy-may-grow-at-12-in-2021-moodys/articleshow/81585920.cms?from=mdr

https://indianexpress.com/article/explained/why-moodys-downgraded-india-6437798/