Preliminary analysis after lockdown shows millions are slipping below poverty line
A recent survey in 10 states found poor households lost 60% of average monthly income in April
The coronavirus pandemic is pushing millions of Indians into poverty and eroding the hard-fought gains made in the past two decades, the World Bank said.
“Between 2011-12 and 2015, poverty declined from 21.6% to an estimated 13.4% at the international poverty line (2011 PPP $1.90 per person per day), continuing the earlier trend of rapid poverty reduction. However, preliminary analysis following the national covid-19 lockdown suggests these gains are eroding," the World Bank said in its India Development Update on Wednesday. “A recent telephonic survey across 10 states found poor households expected to lose around 60% of their average monthly income in April following the national lockdown."
Almost half of India’s population was vulnerable to slipping back into poverty even prior to covid-19, with consumption levels precariously close to the poverty line, despite absolute poverty reduction in the past two decades. “A contraction in high-frequency consumption indicators, such as quarterly sales of two-wheeled vehicles, FMCG (fast-moving consumer goods), and retail personal credit disbursements, also suggests increased vulnerabilities for poorer households. These households are likely to slip back into poverty because of income and job losses triggered by covid-19," it said.
The National Sample Survey Office data suggests that a 30-day period without work can reduce household consumption expenditures for the poorest quintile by 10%.
“Impacts of the global covid-19 pandemic will also compound pre-existing concerns that the pace of poverty reduction had been disrupted by implementation challenges of indirect tax reforms, the stress in the rural economy, and high youth urban unemployment rates. Social inequalities in poverty, well-being, and access to jobs, particularly for women and tribal communities, are expected to amplify differences in how the evolving economic crisis impacts different social groups," the report said.
About 90% of the workforce is informal, without access to significant savings or workplace-based social protection benefits such as paid sick leave or social insurance. The latest Indian Periodic Labour Force Survey (2018-19) showed only 47.2% of urban male workers and about 55% of urban female workers were regular wage or salaried employees. These proportions are much lower for rural workers.
“Even among workers in formal employment in the non-agricultural sector, about 70% did not have written job-contracts and about 52% were not eligible for social security benefits. These workers are at risk of (temporarily, depending on the pace of recovery) falling into poverty due to wage and livelihood losses triggered by shrinking economic activity, government-imposed closures, and social-distancing protocols," the World Bank cautioned.
In India, seasonal inter-state migrants dominate low-paying, hazardous, and informal market jobs in key sectors, such as construction, in urban areas.