As this year's budget is all set to be released on 1st February, the issue of economic recovery in the times of pandemic has found a place in the public discussions. The recently released ICE360 Survey 2021 indicates the latest trend of the widening gap in annual household income during the year 2020-2021.
The ICE360 Survey 2021 (wave 3) was conducted by PRICE (People Research on India's Consumer Economy). It is a non-profit think tank and mostly focuses on the household level view of India's consumer Economy and India's citizen environment. The survey was conducted between April- October, 2021. It was conducted in two stages, the first stage included 200,000 households and 42,000 in the second stage, including 120 towns, 800 villages, and 100 districts.
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How has Covid deepened the household income gap?
As per the survey, the annual income of the poorest 20% of India has fallen by 53% in the year 2020-2021 in comparison to the levels in 2015-2016. Whereas a contrast was seen in the case of the richest section of the country. The richest 20% has seen a growth of 39% in the same period. This shows the adverse economic implications of the pandemic on the poorest section.
The situation of Covid-19 has deepened the income gap between rich and poor. It is deeply concerning as it would reinforce the pyramid structure, where the bottom tiers are the most affected population. The survey had divided the population into groups of 5, including both rural and urban populations.
As the poorest 20% saw a fall of 53%, similar was the case of the lower middle class. The lower middle class (20%) saw a decline of 32% and the middle income category (20%) saw a fall of 9%. On the other hand the upper middle class (20%) had a rise by 9% and the richest (20%) experienced a rise of 39%.
The post liberalisation and pre-covid period was seeing a slight rise in the household income of the poor in the country. Household income measurement plays a crucial role in a consumption driven economy. The survey shows the unprecedented economic trends in the recent 5 years. The survey also indicates that more job losses were experienced by the casual labour force in the small and medium enterprises. This was not much seen in the case of big companies.
The survey highlights a K-shaped recovery. It is a form of economic recovery where different economic groups or sectors recover at different rates, after a recession. This form of recovery is not uniform, and indicates economic inequality. According to The Indian Express, the CEO of PRICE, Rajesh Shukla said that the K-shaped recovery in the economy needs to be considered so that the bridge between the two ends can be built and the disparity can be narrowed down.
Rama Bijapurkar, one of the authors of the survey said that the data reveals that the casual labour, household workers and petty traders of the Tier-1 and Tier-2 cities are one of the most affected people by the pandemic.
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Adding some suggestions for recovery, he said " Inspiring confidence through long term policy stability and improving ease of doing business should make the tide rise again and sweep small businesses and individuals up along with it." He also added that most big companies are doing well and don't need further help, but it is crucial to help the bottom half to recover.
The Oxfam report "Inequality Kills" released in January 2022, also points out the similar condition of disparity seen in India. The report has also suggested changes in structures of government, economy, and policy-making in order to fight these inequalities, not only in India but also in other countries. The report calls out the economic disparity between the billionaires and the poorest section of the society and states that the collection of global wealth in the hands of a few is extremely dangerous for the world.
Pandemic has affected the economies all over the world. India is definitely a large economy globally, but the pandemic has strengthened the economic inequality among the people. The survey has highlighted the issue of income disparity due to the pandemic just ahead of the budget. It indicates that the measures of economic recovery needs to be focused on supporting the vulnerable groups who have suffered the adverse economic implications.