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India could see millions pushed into extreme poverty due to pandemic

India may see millions pushed into extreme poverty on account of the Covid-19 pandemic, according to a World Bank analysis.

The numbers are based on the recent growth projections, forecasting that the Indian economy may contract in 2020-21 by 3.2 percent.

It pointed out South Asia may see a larger increase in the number of poor as a result of the pandemic, followed by Sub-Saharan Africa. Of the 100 million expected to be pushed into extreme poverty, 42 million are in South Asia and 39 million in Sub-Saharan Africa.

“The new GEP (global economic output) forecasts give a particularly sobering picture for India, which is home to many of the world’s poor. As a result, though the picture is broadly unchanged for Sub-Saharan Africa compared to our last update, South Asia may see a larger increase in the number of poor as a result of Covid-19,” said the analysis published on the bank’s website on 8 June.

However, the authors placed a caveat on their findings.

 “A big caveat to this finding is that the latest poverty estimates we have from India are from 2011-12. This makes it very difficult to get an accurate picture of poverty there before the pandemic took off, let alone a picture of poverty today,” it said.

With the last round of consumption survey for 2017-18 - that forms the basis of poverty estimates - scrapped by the Indian government and the 2020-21 survey unlikely to be taken up due to the pandemic, India may not have any poverty estimates for nearly 10 years.

What led to upswing in poverty estimates

Using the updated global growth numbers released in June by the World Bank, the analysts forecast that 71-100 million or 7-10 crore people across the world may be pushed into poverty due to the pandemic.

This corresponds to a predicted global growth contraction of 5-8 percent this year. The earlier poverty projections in April had pegged this number at 40-60 million or 4-6 crore.

The analysts pointed out since April, the epicenter of the pandemic has “shifted from Europe and North America to the global south, increasing the death toll in low and middle-income countries, induced longer shutdowns, and increased the economic costs of the pandemic”. This has led to an uptick in the poverty estimates.

The poverty line used to make the estimates is the international poverty line of $1.9 per day or roughly Rs 145-150 per day.

Growth & poverty forecasts for next year

For the next year, the World Bank pointed out that projecting what happens in 2021 and beyond comes with even more uncertainty.

It added through the growth forecasts for next year expect the global economy to recover, poverty forecasts suggest that the number of people living in extreme poverty will be broadly unchanged between 2020 and 2021.

“A lot has to do with the growth rates of the countries with the poorest. Nigeria, India, and the Democratic Republic of Congo - three countries which we project are home to more than a third of the world’s poor - are predicted to have per capita growth rates in real GDP of –0.8%, 2.1%, and 0.3%, respectively. With population growth rates of 2.6%, 1.0%, and 3.1%, this is hardly enough for sustainable decreases in the poverty headcount,” the analysis said.