Covid-19 pushes India’s middle class to poverty
PANDEMIC DROVE MILLIONS OUT OF MIDDLE CLASS LAST YEAR. NOW, A SECOND WAVE IS SHATTERING MANY MORE DREAMS
Amid raging second wave of Covid in India, millions of people are in danger of sliding out of the middle class and into poverty. Already, about 32 million were driven into poverty by the pandemic last year, according to the Pew Research Centre. “I have nothing left in my pocket,” said Anand, 38, whose dreams of becoming a fashion designer were dashed. “How can I not give food to my children?” Like Anand, a former flight attendant, the middle class dreams of tens of millions of people face even greater peril. Yesterday, India confirmed 217,353 new cases, eighth record daily increase in the last nine days, including 1,185 deaths.
I have nothing left in my pocket ... How can I not give food to my children?” Ashish Anand | Father of two
Ashish Anand had dreams of becoming a fashion designer. A former flight attendant, he borrowed from relatives and poured his $5,000 life savings into opening a clothing shop on the outskirts of Delhi selling customdesigned suits, shirts and pants.
The shop, called the Right Fit, opened in February 2020, just weeks before the coronavirus struck India. Prime minister Narendra Modi abruptly enacted one of the world’s toughest nationwide lockdowns to stop it. Unable to pay the rent, Anand closed the Right Fit two months later.
Now Anand, his wife and his two children are among millions of people in India in danger of sliding out of the middle class and into poverty. They depend on handouts from his ageing inlaws. Khichdi, or watery lentils cooked with rice, has replaced eggs and chicken at the dinner table. Sometimes, he said, the children go to bed hungry.
“I have nothing left in my pocket,” said Anand, 38. “How can I not give food to my children?”
Now a second wave of Covid-19 has struck India, and the middle class dreams of tens of millions of people face even greater peril. Already, about 32 million people in India were driven into poverty by the pandemic last year, according to the Pew Research Centre, accounting for a majority of the 54 million who slipped out of the middle class worldwide.
Many of the hardest hit come from India’s merchant class, the shopkeepers, stall operators or other small entrepreneurs.
Undoing decades of progress
The pandemic is undoing decades of progress for a country that in fits and starts has brought hundreds of millions of people out of poverty. Already, deep structural problems and the sometimes impetuousnature of many of Modi’s policies had been hindering growth. A shrinking middle class would deal lasting damage.
“It’s very bad news in every possible way,” said Jayati Ghosh, a development economist and professor at the University of Massachusetts Amherst. “It has set back our growth trajectory hugely and created much greater inequality.”
The second wave presents difficult choices for India and Modi. India yesterday reported more than 216,000 new infections. Lockdowns are back in some states. With work scarce, migrant workers are packing into trains and buseshome.
Yet Modi appears unwilling to repeat last year’s draconian lockdown, which left more than 100 million Indians jobless and which many economists blame for worsening the pandemic’s problems. His government has also been reluctant to increase spending substantially like the US and some other places, instead releasing a budget that would raise spending on infrastructure and in other areas but that also emphasises cutting debt.
‘I can’t afford to admit my mother in hospital’
The Modi government has defended its handling of the pandemic, saying vaccinations are making progress. Economists are forecasting a rebound in the coming year. The heady growth forecasts feel far away for Nikita Jagad, who was out of work for over eight months. Jagad, a 49-year-old resident of Mumbai, stopped going out with her friends, eating at restaurants and even taking bus rides, unless the trip was for a job interview. Sometimes, she said, she shut herself inside her bathroom so her 71-year-old mother wouldn’t hear her crying.
Last week, Jagad got a new job as a manager at a company that provides housekeeping services for airlines. It pays less than $400 a month, roughly half her previous salary. It could also be short-lived: Maharashtra, home to Mumbai, announced lockdown-like measures this week to stop the spreading second wave.
India is not even discussing poverty or inequality or lack of employment or fall in incomes and consumption.”
Mahesh Vyas | Chief executive, Centre for Monitoring of Indian Economy
Potent economic force
India’s middle class may not be as wealthy as its peers in the US and elsewhere, but it makes up an increasingly potent economic force. While definitions vary, Pew Research defines middle-class and upper-middle-class households as living on about $10 to $50 a day.
Roughly 66 million people in India meet that definition, compared with about 99 million just before the pandemic last year, according to Pew research estimates. These increasingly affluent Indian families have drawn foreign companies like Walmart, Amazon, Facebook, Nissan and others to invest heavily in a country of aspirational consumers.
‘Everything turned turtle within a few hours’
Anil G. Kumar, a civil engineer, was one of them. He and his family were about to buy a two-bedroom apartment. But when last year’s lockdown hit, Kumar’s employer slashed his salary by half.
“Everything turned turtle within a few hours,” he said. Three months later, his job had been eliminated.
The family’s middle-class life is now under threat. They survive on the $470-a-month salary Kumar’s wife draws from a private university.
Unemployment is killing hope
India’s middle class is central to more than the economy. It fits into India’s broader ambitions to rival China, which has grown faster and more consistently, as a regional superpower.
Many of the hardest hit come from India’s merchant class, the shopkeepers, stall operators or other small entrepreneurs who often live off the books of a major company.
“India is not even discussing poverty or inequality or lack of employment or fall in incomes and consumption,” said Mahesh Vyas, the chief executive of the Centre for Monitoring of the Indian Economy. “This needs to change first and foremost,” he said.
Most Indians are “tired” and “discouraged” by the lack of jobs, said Vyas, especially lowskilled workers.
“Unless this problem is addressed,” he said, “this will be a millstone that will hold back India’s sustained growth.”