The Middle class in India shrunk by a third and the people earning less than Rs 150 per day more than doubled due to Covid 19 pandemic driven recession, according to a report by the Pew Research Center.
The analysis released recently, however, said that Chinese income remained relatively unshaken, with just a two per cent drop in middle class population. The Pew Research used World Bank economic growth projections to estimate the impact of the pandemic on Indian incomes. The Indian economy plunged into a deep recession with businesses shut, jobs lost and falling incomes.
The Pew Research Center said that middle class in India shrunk by 32 million in 2020 because of the pandemic. In the analysis, the researchers said that the course of the pandemic in India and China and recovery in these countries would have a substantial effect on changes in the distribution of income at the global level. This is because these countries account for more than a third of the global population.
In January 2020, the World Bank forecast pointed to almost the same growth in real Gross Domestic Product in India (5.8 per cent) and China (5.9 per cent) in 2020. However, in January 2021, the forecast estimated a downward to -9.6 per cent for India but forecast two per cent growth for China.
The report also the recession led to an increase of the number of people who are poor in India (with incomes of two dollars or less a day). It increased by 75 million because of the recession. Ahead of the pandemic, estimates suggested that 99 million people in India would come in the global middle class in 2020. However, a year into the Covid -19, this number came to 66 million.
The Pew Research said that more people China came in the middle and upper middle-income tiers than in poverty and the low-income tier. However, the researchers said that the drop in living standards last year in India and China is a sharp departure from recent trends. The number of poor in India is estimated to have decreased from 340 million to 78 million from 2011 to 2019. The projected rise in poverty in 2020 when comparing pre-pandemic and revised figures – 75 million – claws back several years of progress on this front for India. The retreat of India’s middle class in 2020 by 32 million also looms large in the context of the addition of 57 million to this income tier from 2011 to 2019, the research said.
From 2011 to 2019, China had a sizable addition of 247 million people to the middle-income tier. Meanwhile, the upper-middle income population had nearly quadrupled from 60 million to 234 million.