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India's middle classes pushed into poverty in COVID-19
Read more on - Polity | Economy | Schemes | S&T | Environment
- Sustained shock: While India grapples with the second Coronavirus shock in 2021, about 32 million people were driven into poverty by the pandemic in 2020 itself (as per Pew Research Center report). That was a majority of the 54 million who slipped out of the middle class worldwide.
- Families in dire strait: Many middle class families, with the breadwinners either in jobs or having started some business, are in dire straits. Millions of people in India in danger of sliding out of the middle class and into poverty. For many, khichdi, or watery lentils cooked with rice, has replaced eggs and chicken at the dinner table. Sometimes, children are even going to bed hungry. With the second wave of COVID-19, the middle class dreams of tens of millions of people face even greater peril.
- Massive reverse gear: The pandemic is undoing decades of progress for a country that in fits and starts has brought hundreds of millions of people out of poverty. Deep structural problems and the sometimes impetuous nature of many of government’s policies had been hindering growth. A shrinking middle class would deal lasting damage to India's dream story.
- The second wave presents difficult choices for India. Lockdowns are back in some states. With work scarce, migrant workers are packing into trains and buses home as they did in 2020. The country’s vaccination campaign has been slow, though the government has picked up the pace.
- Yet government is unwilling to repeat 2020's draconian lockdown, which left more than 100 million Indians jobless and which many economists blame for worsening the pandemic’s problems. The government has also been reluctant to increase spending substantially like the United States and some other places, instead releasing a budget that would raise spending on infrastructure and in other areas but that also emphasizes cutting debt.
- The Modi government has defended its handling of the pandemic, saying vaccinations are making progress and that signs point to an economic resurgence.
- The difference: India’s middle class may not be as wealthy as its peers in the United States and elsewhere, but it makes up an increasingly potent economic force. While definitions vary, Pew Research defines middle-class and upper-middle-class households as living on about $10 to $50 a day. The kind of income could give an Indian family an apartment in a nice neighborhood, a car or a scooter, and the opportunities to send their children to a private school. Roughly 66 million people in India meet that definition, compared with about 99 million just before the pandemic last year, according to Pew Research estimates. These increasingly affluent Indian families have drawn foreign companies like Walmart, Amazon, Facebook, Nissan and others to invest heavily in a country of aspirational consumers.
- Central: India’s middle class is central to more than the economy. It fits into India’s broader ambitions to rival China, which has grown faster and more consistently, as a regional superpower. To get there, the Indian government may need to address the people the coronavirus has left behind. Household incomes and overall consumption have weakened, even though the sales of some goods have increased recently because of pent-up demand. Many of the hardest hit come from India’s merchant class, the shopkeepers, stall operators or other small entrepreneurs who often live off the books of a major company.
- Firms like CMIE point out that India is not even discussing poverty or inequality or lack of employment or fall in incomes and consumption now.
- Most Indians are “tired” and “discouraged” by the lack of jobs, especially low-skilled workers. Unless this problem is addressed, it will be a millstone that will hold back India’s sustained growth.
- Summary: India's national political narrative is not even focusing on the large segment of middle class that is collapsing. It would be a big problem in coming years if this issue is not resolved. India cannot sustain a situation where a 1% elite rich class sustains and flourishes, when a vast mass of poor and newer ones joing them, abound.
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