The pandemic will leave India with worse inequality
A failure to protect incomes could widen the gap between have-nots and haves and thus hurt growth
When the facts change, I change my mind," John Maynard Keynes is believed to have said almost a century ago. Responding to the economic after-shocks of the covid pandemic, governments and central banks have been living by this maxim. In the UK and US, supposedly fiscally conservative governments have spent with abandon to prop up the incomes of the poorer sections of society. In the US, a pay cheque protection programme and expanded unemployment insurance gave the poorest 10th percentile of households an increase in income of 165% in April and 14% in May, compared with February 2020 levels. More than 80% of workers in the retail, restaurant and hotel sectors in the US were eligible to receive more benefits from unemployment insurance than from working.