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The pandemic’s unequal burden needs nuanced policy response

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Several multilateral institutions as well as private surveys have estimated an increase in poverty in the past year as a result of the decline in economic activity and loss of incomes

While estimates on the likely impact on poverty vary, a permanent loss of income for most people at the lower end of our income distribution is beyond dispute

India’s covid infections per day crossed 400,000 on 5 May. While it is difficult to predict the peak of this second wave, more than a year of the pandemic has wreaked havoc on the lives and livelihoods of a majority of Indians already. Vaccines are likely to provide some relief sooner or later, depending on the speed of vaccinations, but the long-term impact of the pandemic is unlikely to be shared equally by different sections of the country’s population.

India’s covid infections per day crossed 400,000 on 5 May. While it is difficult to predict the peak of this second wave, more than a year of the pandemic has wreaked havoc on the lives and livelihoods of a majority of Indians already. Vaccines are likely to provide some relief sooner or later, depending on the speed of vaccinations, but the long-term impact of the pandemic is unlikely to be shared equally by different sections of the country’s population.

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Several multilateral institutions as well as private surveys have estimated an increase in poverty in the past year as a result of the decline in economic activity and loss of incomes. While estimates on the likely impact on poverty vary, a permanent loss of income for most people at the lower end of our income distribution is beyond dispute. An economic recovery seen until February-end has slowed down, with fresh lockdowns and curbs on commercial activity since the second wave broke, but it is the impact on inequality and inter-generational mobility that could prove to be the biggest setback to the Indian growth story.

While the virus does not distinguish between the rich and poor, the impact of covid has varied depending on the economic strata of households. Those who have directly been affected may have suffered from the death of an earning member of the family. But even those who have been spared such misery, a large majority would suffer unbearably large health expenditures. Such burdens are already the most significant factor in households falling into chronic poverty. More so for those below or around the poverty line.

What makes matters worse is the spread of infections this year to a large number of rural districts, particularly in northern states. Most of these districts, located in states with high densities of the poor, were less affected last year but are crisis-struck now. Given that India’s rural economy has been in deep distress for the past five years, this is tragic.

While the economy is likely to recover at some point, the recovery itself will not be neutral for everyone. The pandemic has not only disrupted the economy, but also contributed to a disruption in access to education, one of the most effective contributors to inter-generational mobility over the decades. Most children in rural areas and also from poorer households in urban areas have had their studies badly disrupted. While better-off households in rural and urban areas have managed through online classes, gaps in education will have serious consequences for those at the bottom of India’s pyramid. Likewise for access to health, with people in rural areas or in small towns and urban agglomerations short of services. Access to vaccines is also unequal, with the better-off able to afford high-priced privately-given jabs, while poorer households are left at the mercy of the state. Given the challenge of making vaccines available to a huge population, the poor are likely to miss out on these, despite the state’s promise of free vaccinations. Taken together, inequalities in access to health services, education and means of nutrition and livelihood will have adverse repercussions on overall inequality and future economic growth in the country.

In any case, the last three decades have witnessed an unprecedented increase in inequality on almost all dimensions, in spite of the economy’s growth performance. While rapid growth did contribute to a reduction in poverty initially, recent data suggests that some of these gains may have been wiped out, with poverty also having increased. This was the situation even before the pandemic hit the country. Since then, the scenario has worsened with a sharp contraction in economic activity last year and our prospects of a quick recovery looking dimmer.

As of now, the pandemic has merely highlighted the large disparities that exist across states, rural and urban areas, and across different sections of India’s population on a range of parameters. But the unequal burden of the pandemic has engendered trends that point to these gaps widening for a prolonged period.

The second wave of the pandemic could be contained through vaccinations and boosts to our health infrastructure, but healing the economy and the lives of the poor will require policies to protect their incomes and livelihoods.

It will also require a big shift in India’s policy paradigm. We must now prioritize universal access to basic services such as health and education, and support the nutritional and livelihood needs of India’s vast majority. This is not just necessary to deal with the immediate shocks of the pandemic, but also crucial for ensuring equality and inter-generational mobility in the long run.

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