Poorer states, the most hit

Every year, October 17 is commemorated as International Day for the Eradication of Poverty since 1992 by the United Nations. The theme of this year was “Building Forward Together: Ending Persistent Poverty, Respecting all People and our Planet”. Not only the theme but this year assumes significance in the wake of Covid-19-induced crisis as it has direct implications on poverty. The income inequalities, incidence of poverty and unemployment rate are the three core components of the inclusive economic growth. All three features are intrinsic and are deepened by the Covid-19 pandemic. In this backdrop, it is essential to explore the nature of poverty and its changing dynamics.

The World Bank’s report Poverty and Shared Prosperity 2020: Reversals of Fortune has projected that, in 2020, between 88 million and 115 million people could fall back into extreme poverty as a result of the pandemic, with an additional increase of between 23 million and 35 million in 2021, potentially bringing the total number of new people living in extreme poverty to between 110 million and 150 million. It also observed that the South Asia region will be the hardest hit, with 49 million (almost 57 million under the downside scenario) additional people pushed into extreme poverty.

As per the Tendulkar Committee estimations, India’s 21.92% of the population were living below poverty line in 2011-12. However, as per the National Family Health Survey NFHS-4 (2015-16), the multi-dimensional poverty rate was 27.9%. The poverty rate which was 45% in 1994 declined especially during 2004-2011 where India implemented substantive anti-poverty measures and rights-based initiatives to uplift the poor people from the clutches of poverty. One of the factors for the reduction in poverty rate during 2004-2012 was due to the employment shift from farm to non-farm especially in the services sector.

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Just before the onset of Covid-19, the Global Multi-dimensional Poverty Index (MPI) 2018 report stated that “India has made momentous progress in reducing multidimensional poverty. The incidence of multidimensional poverty was almost halved between 2005/06 and 2015/16, climbing down to 27.5%. The global MPI was cut by half due to faster progress among the poorest. Thus, within 10 years, the number of poor people in India fell by more than 271 million – a truly massive gain”.

This has been affected by the Covid-19 pandemic due to loss of work and earnings, and the people, especially informal and daily wage labourers, are pushed into the vicious cycle of poverty. A study conducted by the Azim Premji University (2021) finds that the pandemic resulted in “230 million additional individuals slipped below the poverty line defined by the national floor minimum wage” and taken away the anti-poverty efforts that was in place for the last two decades.

All the above estimations are projections based on the high frequency telephonic interviews and are mostly covered the impact of Covid-19 first wave on the people’s lives. The projections do not cover the devastating effect of Covid-19 during the second wave in 2021.

The revised estimates of the World Bank team suggest that the pandemic has pushed 97 million people into the poverty in 2020 alone. In 2021, this number may decrease by 21 million indicating the reduction in the severity of poverty. However, this means reduction in the number of people living below the international line of poverty $1.90 (in purchasing power parity [PPP] terms) a day.

Complex problem

On the other side, the UNDP and Oxford Poverty and Human Development Initiative (2021) on MPI has observed that the pandemic has deepened the multiple deprivations making it a much more complex problem to deal with by the governments. Hence, it is insufficient to roll out only income-related policies such as cash transfers, food supplies; what is imperative is the strengthening of social security measures with assured income and health facilities’ to prevent the people falling from relative to absolute/chronic poverty.

The World Bank has expressed methodological concerns over the estimations of India because the number of people being pushed into poverty due to the pandemic was projected on the basis of 2011 figures of poverty. It ascertained that these estimations are subjected to the changes occurred between 2011-2021 including the effect of governmental policy measures in containing the pandemic and other poverty alleviation measures.

Krishna Ram and Shivani Yadav by using Periodic Labour Force Survey (2018-19) data have estimated that the number of rural poor may go up to 381-418 million (post pandemic) from 265 million (pre pandemic) along with the rise of 36-46 million in urban poor with the total headcount ratio reaching 50.9-55.87% and 39.08-42.4% for rural and urban areas, respectively. The SC and ST were hard hit by the pandemic-induced poverty followed by the minorities and Other Backward Classes as it completely disrupted the livelihood of informal workers.

The pandemic-induced poverty has serious implications at global and national levels especially in achieving the Sustainable Development Goals of 1 (No Poverty) and 2 (Zero Hunger). India improved its scoring from 50 (2019) to 60 (2020) in SDG-1 as per the SDG Index of 2020-21. The goal of reducing the number of poor people to half by 2030 now seems to be unrealistic as the Covid-19 in 2020 and 2021 has took away the two decadal efforts and achievements in uplifting the poor people from the clutches of both relative and absolute poverty.

The devastating impact of Covid-19 is evident in the states of Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha and Uttar Pradesh – the states which constitute major chunk of total poor people in the country. India must conduct official estimations of poverty in the ongoing census to formulate appropriate policy interventions to eradicate poverty. In the meantime, the state governments can make use of Socio Economic and Caste Census-2011 data for revisiting the poverty alleviation programmes to capture the impact of Covid-19.

(The writer is PhD Fellow, Centre for Political Institutions, Institute for Social and Economic Change, Bengaluru)