COVID-19 first wave pushed 23 crore Indians into poverty: Azim Premji University
Business Today | May 06, 2021
The report, titled ‘State of Working India Report 2021’ stated that rural India witnessed a 15% increase in poverty and a 20% rise was registered in urban areas after one year of the coronavirus pandemic
The first wave of the COVID-19 pandemic shoved a staggering 230 million (23 crore) Indians below the poverty line, estimated a study by the Azim Premji University.
The report, titled ‘State of Working India Report 2021’ stated that rural India witnessed a 15% increase in poverty and a 20% rise was registered in urban areas after one year of the coronavirus pandemic.
“Coming on a low-income base, this shock meant that the number of individuals who lie below the national minimum wage threshold (Rs 375 per day as recommended by the Anoop Satpathy committee) increased by 230 million during the pandemic,” according to the report.
“This amounts to an increase in the poverty rate by 15 percentage points in rural and nearly 20 percentage points in urban areas. Had the pandemic not occurred, poverty would have declined by 5 percentage points in rural areas and 1.5 percentage points in urban areas between 2019 and 2020, and 50 million would have been lifted above this line,” it added.
The report further highlighted how women lost more employment than men during the COVID-19 pandemic last year, how around half of formal salaried workforce moved into informal work, and how poorer households underwent considerably higher income losses during the lockdown period.
Mobility curbs resulted in income losses because of decreased economic activity, the report noted. “A 10% decline in mobility was associated with a 7.5% decline in income,” it stated, suggesting the situation could get worse if more lockdowns are imposed in the future.
The report proposed that the Centre will need to roll out a relief package worth Rs 8 lakh crore to contain hardships being faced by lower-income groups due to the economic impact of COVID-19.
The report is based on inputs from Consumer Pyramids Household Survey, Azim Premji Foundation, and many other civil society organisations.
The study found that nearly half of formal salaried workers moved into informal work, either as self-employed (30 per cent), casual wage (10 per cent) or informal salaried (9 per cent) workers, between late 2019 and late 2020 and there was a decline in their income level as well.
In April and May, the poorest 20 per cent of households lost their entire income and the richer households suffered losses of less than a quarter of their pre-pandemic incomes, the report said.
To bring relief for the people suffering hardships of COVID-19 impact, the Azim Premji University report, released on Wednesday, recommended measures that would cost the government an additional expenditure of around Rs 8 lakh crore.
“The measures that we have proposed will bring the spending by the government of India to 4.5 per cent of overall GDP between this year and last or about Rs 8 lakh crore. We think that is not even internationally comparable to what other countries have done, but really what India needs to do,” Azim Premji University associate professor of economics Amit Basole said while releasing the report.
According to the report, the public distribution system has a wider reach than Jan Dhan Yojana, and free rations under the PDS should be extended beyond June, at least till the end of 2021.
In Karnataka and Rajasthan, out of those with women-owned Jan Dhan accounts, 60 per cent received one or more transfers, around 30 per cent did not receive any transfers and 10 per cent did not know about the fund status in their account, it added.
The university report recommended a cash transfer of Rs 5,000 for three months to as many vulnerable households as can be reached with the existing digital infrastructure, including but not limited to Jan Dhan accounts.
It has suggested expanding the MGNREGA entitlement to 150 days and revising programme wages upwards to state minimum wages.
This needs to expand the programme budget to at least Rs 1.75 lakh crore, according to the report.
It has also recommended launching a pilot urban employment programme in the worst-hit districts with a focus on women workers, increasing the central contribution in old-age pensions to at least Rs 500, a COVID hardship allowance to 25 lakh Anganwadi and ASHA workers of Rs 30,000 and automatically enrolling all MGNREGA workers who do construction work as registered workers under the building and other construction workers (BoCW) Act.