The pillars of an equitable post-COVID India -S Mahendra Dev
In the post-pandemic world, addressing inequality is key to sustaining growth and well-being
COVID-19 in the last one year has once again reminded us of the growing inequalities in India. A recent Pew Research Report shows that India’s middle class may have shrunk by a third due to the novel coronavirus pandemic while the number of poor people earning less than 150 per day more than doubled. The Pew report also warned that the situation may actually be worse than estimated because of worsening inequalities. International organisations like the World Bank, the International Monetary Fund and the International Labour Organization have also warned about rising inequalities in several countries including India due to the pandemic.
Made worse now
Inequalities in India have been high even in the pre-COVID-19 period. The economic shock due to the pandemic has been much more severe for the country for two reasons. First, pre-COVID-19, the economy was already slowing down, compounding existing problems of unemployment, low incomes, rural distress, malnutrition, and widespread inequality. Second, India’s large informal sector is particularly vulnerable. Inequalities were increasing earlier also but the pandemic has widened them further. For example, the share of wages declined as compared to that of profits. The big companies and a large part of the corporate sector could manage the pandemic. The quarterly net profit of the BSE200 companies reached a record high of 1.67 trillion in the third quarter of FY21 and was up by 57% year-on-year. But the informal sector and workers have suffered a lot with loss of incomes and employment in the last one year. In other words, the recovery is more k-shaped with rising inequalities.
The economy recovered in the third quarter of FY21 with a positive GDP growth of 0.4% as compared to minus 24.4% in the first quarter and minus 7.3% in the second quarter. For the year FY21, the economy would contract by 8%. GDP growth is likely to increase by 10%-11% in FY22. But the levels of GDP show that it will grow only around 1.1% in FY22 as compared to FY20 levels. According to the Centre For Monitoring Indian Economy, the employment rate is still 2.5 percentage points lower now as compared to the level before the lockdown last year. Women lost more jobs and many are out of the workforce. Inequalities have increased in health care and education.
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The Hindu, 6 April, 2021, https://www.thehindu.com/opinion/op-ed/the-pillars-of-an-equitable-post-covid-india/article34247987.ece?homepage=true
Tagged with: Migrant Workers Informal Sector Informal Workers Income Disparity Wealth Inequality Universal Basic Income Social Safety Nets Human Development Productive Employment Micro, Small & Medium Enterprises MSMEs Social Security Minimum Wages Public Expenditure on Health MGNREGA