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LATEST NEWS UPDATES | Poverty rose but income inequality fell -Anup Malani Arpit Gupta, and Bartek Woda

Poverty rose but income inequality fell -Anup Malani Arpit Gupta, and Bartek Woda

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published Published on Mar 28, 2022   modified Modified on Mar 28, 2022

-The Hindu

There are signs that this pandemic has not followed the usual script — of the poor bearing the brunt of the pain

COVID-19 has upended Indian society. Over two-thirds of the country has been infected by COVID-19 and perhaps five million or so people have died, directly or indirectly, from the pandemic. The economy too has taken a beating. Even though there has been a V-shaped recovery, output remains about 10% lower than 2019.

In macroeconomic crises, including the oil shock of 1990-91 or the global liquidity crisis of 2007-08, many expect the poor to bear the brunt of the pain. They are the most vulnerable, without contractual protections and adequate safety nets. But there are signs that this pandemic has not followed that script. 

Poverty certainly rose during the COVID-19 pandemic. We examined monthly data from nearly 2,00,000 households with a total of one million members from the Consumer Pyramids Household Survey through 2021.

We found that extreme poverty, defined by the World Bank as the percentage of the population with an income below $1.90, rose from 7.6% in November 2019 to 11.7% in July 2021.

Income inequality 

However, income inequality actually fell. In 2019, the average monthly income of households in the top 25% and bottom 25% of the income distribution was approximately 45,000 and 8,000, respectively, in urban areas, and 22,500 and 7,500, respectively, in rural areas. While the average monthly income of the top quartile in urban areas fell almost 30%, to 32,500 by July 2021, the monthly income of the bottom quartile in July 2021 remained at pre-pandemic levels. In rural areas, the top quartile income fell by perhaps 20%, while the bottom quartile income grew slightly during the same period. The result is that inequality, measured as the percentage change in the income of the top quartile minus the income in the bottom quartile, fell by 15-20 percentage points. This is a robust finding: richer households saw larger drops in income all along the income scale, in rural and urban areas, within each State, and even within caste groups. 

Please click here to read more. 


The Hindu, 28 March, 2022, https://www.thehindu.com/opinion/op-ed/poverty-rose-but-income-inequality-fell/article65265220.ece?homepage=true


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