Pandemic shrunk India’s middle class by 32 million, drove 75 million below poverty line: Pew report
China fared much better, with the number of people in the middle-income tier decreasing by only one crore, and the poverty level virtually unchanged.
The economic downturn driven by the coronavirus pandemic pushed 75 million (7.5 crore) Indians below the poverty line in 2020, and shrunk the country’s middle class by 32 million (3.2 crore), an analysis by the Pew Research Centre found on Thursday.
In comparison, China fared much better, with the number of people in the middle-income tier decreasing by only 10 million (one crore), and the poverty level virtually unchanged last year.
Given that India and China account for more than a third of the global population, the course of the pandemic in these two countries – and how each recovers – would have a substantial effect on changes in the distribution of income at the global level, according to Pew Research Centre.
While India plunged into a deep recession in 2020, China was able to forestall a contraction, Pew Research Centre said, citing the World Bank’s forecasts of economic growth. “India is estimated to have seen a greater decrease in the middle class and a much sharper rise in poverty than China in the COVID-19 downturn,” the report said.
Pew said that this was also evident from the economic forecasts made by the World Bank. In 2020, the global body had pointed to virtually the same growth in real gross domestic product in India (5.8%) and China (5.9%) in 2020. But by January 2021, nearly one year into the pandemic, the World Bank revised these growth estimates downward to -9.6% for India but forecast 2% growth for China.
The contrast in how living standards evolved in India and China amid the pandemic was starker in the context of where they stood prior to the pandemic, the report noted.
Prior to the pandemic, it was anticipated that 99 million people in India would belong in the global middle class in 2020. A year into the pandemic, this number is estimated to be have been 66 million, cut by a third, Pew said.
Meanwhile, the number of poor in India is projected to have reached 134 million (13.4 crore), more than double the 59 million (5.9 crore) expected prior to the recession. The poverty rate in India likely rose to 9.7% in 2020, up sharply from the January 2020 forecast of 4.3%, the report said.
In China, about 10 million (one crore) people are estimated to have fallen out of the middle class in the downturn, Pew said. But this is a small share of the 504 million (5.04 crore) who were in the middle class ahead of the pandemic, it noted.
Likewise, Pew said the expansion of the low-income tier in China from 611 million to 641 million or the number of poor from 3 million to 4 million during the pandemic was “comparatively modest in number”.
“Importantly, China accounted for 37% of the global middle-income population heading into 2020,” it added. “Because economic growth in China remained positive, even if slower than anticipated, the limited impact on its middle class helped to ease the strain on the global middle class.”