SEATTLE, Washington — The coronavirus pandemic has devastated economies worldwide. Although lockdowns are an effective measure to halt the spread of COVID-19, many people around the world lost their jobs and livelihoods. As a result, some find it impossible to support themselves and their families. These effects are demonstrated by looking at India’s economy, which was on the rise years prior to the pandemic. Accounting for 17.7% of the world’s population, COVID-19 has resulted in an increasing poverty rate in India, affecting millions living in the country.
Before the Pandemic
The 2019 global Multidimensional Poverty Index (MPI) reported that India lifted 271 million citizens out of poverty between 2006 and 2016. The system, created by the United Nations, measures poverty based on a multitude of factors. Factors such as access to drinking water, sanitation, health, education and cooking fuel are accounted for in the MPI. The MPI indicated that India had the fastest-growing poverty reduction rate globally; the 640 million people living below the poverty line in 2005 and 2006 was reduced to 369 million people within the span of 10 years.
Indian Economy During COVID-19
As incredible as this accomplishment is, the effects did not last for long. Due to the effects of COVID-19 in India, progress in poverty reduction has completely backtracked. The following is how the Coronavirus crisis has affected India’s economy:
- India’s GDP contracted by 23.9%. Some attribute this decline to the extreme lockdown measures implemented by Prime Minister Narendra Modi. Because businesses were shut down so abruptly, an estimated 140 million jobs were lost.
- The vulnerable population of India fell deeper into poverty. 400 million workers encompass nearly 90% of the informal workforce in India. Because of COVID-19, these workers are at risk of falling deeper into poverty. This informal economy consists of “economic activities that occur outside the formal labour market.” Informal workforce jobs are typically considered illegal because the goods and services produced and distributed are not accounted for by the government. Because of India’s extreme lockdown measures, which were reported to be on the high end of the University of Oxford’s COVID-19 Government Response Index, numerous informal jobs disappeared and many people who relied on the informal job sector have no alternatives to earn income.
- More women are estimated to live in extreme poverty in the future. According to The World Bank’s projections, as many as 150 million people globally are expected to live below the poverty line in 2021. Of this estimated 150 million people, 100 million Indian women and girls are expected to live in such conditions, increasing from 87 million as of September 2020. Prior to the Coronavirus crisis, more women were living in extreme poverty compared to men. Because of COVID-19 in India, the poverty rate for Indian women is projected to increase from 13.3% to 14.7% in 2021.
The Good News
Although COVID-19 in India has halted the country’s economic growth and impeded poverty reduction efforts, Coronavirus cases have been on the downward trend compared to the peak of the pandemic. Handling the COVID-19 pandemic has been no easy task, and weighing out the economic costs of lockdowns to public health has proven to be nearly impossible. However, being the country to reduce poverty at the fastest rate in history, there is always hope for recovery in India.