Editorial: Widening gulf

The dividing line between two Indias — the haves and have-nots — has now become too sharp and stark to ignore. The pandemic has widened the gulf between the rich and the poor in ways that the country never experienced in the past. The top and bottom of the pyramid absorbed the pandemic shock in […]

The dividing line between two Indias — the haves and have-nots — has now become too sharp and stark to ignore. The pandemic has widened the gulf between the rich and the poor in ways that the country never experienced in the past. The top and bottom of the pyramid absorbed the pandemic shock in vastly different ways. The bottom 20% of the households saw their income levels erode by a staggering 53% in the pandemic year as compared with the 2015-16 levels. According to the latest survey conducted by Mumbai-based think-tank People’s Research on India’s Consumer Economy (PRICE), the annual income of the top richest 20% of households has surged 39% in the same period. This accentuates the social inequalities in a country that is grappling with the largely ineffective welfare programmes, widespread pilferage of the benefits meant for the poor, bureaucratic lethargy and corruption. Earlier, the Oxfam report too had brought to the fore the disturbing realities of the wealth distribution in India. While 4.6 crore Indians are estimated to have fallen into extreme poverty in 2020, the number of Indian billionaires grew from 102 to 143 during the pandemic period. What makes the trend disturbing is the fact that the poorest 20% of Indian households had been seeing their annual income rise constantly since 1995 — the period of economic liberalisation. What was essentially an upward graph since then has now been torn asunder by the pandemic, leading to a possible K-shaped recovery of the economy post-Covid. A ‘K-shaped recovery’ occurs when, after a recession, all parts of the economy do not recover at the same pace.

A significant finding of the survey, which covered 2.42 lakh households spread over 120 towns and 800 villages across 100 districts nationwide, is that the urban poor has been impacted more than their rural counterparts. Job loss, halting of economic activity and loss of income in the labour sector, and the plight of small and medium enterprises added to the woes of the poorest 20% in urban areas. While the rural poor suffered, too, the magnitude of the impact was greater on the urban poor. This could be because the stringent lockdown imposed during the first wave of the pandemic had brought urban economic activity to a complete standstill. Several workers, particularly immigrants, had lost their jobs, while petty traders were forced to close shop. While 10% of the poorest one-fifth of India lived in urban areas in 2016, the figure rose to 30% in 2021. The Centre must keep these new realities in view while formulating the Budget. There is an urgent need to formulate schemes specifically to help the poor recover faster. The coming Budget must focus on bridging the economic divide by putting money directly into the hands of the poor and devising specific schemes to reduce urban poverty.

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