Number of India’s poor ‘doubles’ ; middle class shrinks by a third in 2020

A report released by the Washington-based non-profit Pew Research on Thursday cited the pandemic-triggered recession as reason

Shutterstock

Anita Joshua   |   TT   |   New Delhi   |   20.03.21: India’s middle class is estimated to have shrunk by a third in 2020 and the number of the country’s poor more than doubled because of the pandemic-triggered recession, a report released by the Washington-based non-profit Pew Research said on Thursday.

As a result of the downturn, India’s middle class shrank by over 32 million from the number it may have reached if there were no pandemic. This accounts for 60 per cent of the global retreat in the number of people in the middle-income tier (with daily incomes between $10 and $20, or Rs 725 and Rs 1,450).

Before the pandemic, it was estimated that 99 million people in India would belong to the global middle class in 2020. This number, according to Pew, is now estimated to be near 66 million.

The number of the poor in India (with daily incomes of $2 or less, that is, Rs 145 or less) is estimated to have risen by 75 million because of the Covid-induced recession. This too accounts for nearly 60 per cent of the global increase in poverty.

The report notes that the demand for work under the Mahatma Gandhi National Rural Employment Guarantee Scheme has been the highest since its inception.  The number of the poor in India is expected to have reached 134 million, more than double the 59 million estimated before the recession.

Since India and China together account for a third of the world’s population, Pew Research studied both countries together. It found that while India “plunged into a deep recession”, China was able to “forestall a contraction”.

Before the pandemic, the World Bank had estimated almost equal growth in real GDP in India (5.8 per cent) and China (5.9 per cent) in 2020. A year on, this has been revised downward to minus 9.6 per cent for India and 2 per cent for China, the report notes.