claims a surge in Poverty and inequality in India during the COVID-19 pandemic According to a paper co-authored by eminent economist Arvind Panagariya, such claims are patently false because such claims are based on incomparably different surveys.
The paper also states that during the post-Covid years there has been a reduction in inequality in the country both in rural and urban areas as well as at the national level.
Shri Panagariya, Professor at Columbia University and former Vice Chairman of NITI Aayog, and Vishal More of Intelink Advisors, New Delhi have co-authored a detailed paper ‘Poverty and Inequality in India: Before and After COVID-19’.
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The paper will be presented at an upcoming conference on the Indian economy at Columbia University, organized by the Deepak and Neera Raj Center on Indian Economic Policy at Columbia University’s School of International and Public Affairs.
The paper analyzes poverty and inequality before and after the Periodic Labor Force Survey (PLFS) conducted by the National Statistical Office (NSO) of India.
The main findings of the paper state that the poverty levels obtained from the Periodic Labor Force Survey (PLFS) cannot be compared with the Consumer Expenditure Survey (CES) conducted in 2011-12 due to differences in sample design.
The paper states, “Claims of increase in poverty in 2017-18 should be rejected on the basis of comparison of estimates obtained from CES in 2011-12 and PLFS in 2017-18 or later.” It added that the sample designs of PLFS and CES are vastly different.
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The findings also show that on a quarterly basis, rural poverty increased marginally in the strictest lockdown quarter (April-June 2020), but fell below the pre-COVID-19 level immediately thereafter and continued to decline.
On an annual basis, inequality declined during the COVID-19 era, both in rural and urban areas, and in rural and urban areas combined.
Overall, “claims of huge increases in poverty and inequality during COVID-19 are patently false,” the paper’s findings state.
“On an annual basis, poverty in rural areas continued to decline at a significantly lower rate during the Covid year of 2019-20. Rural poverty saw the same sharp decline in 2020-21 as it did in the pre-Covid year of 2018-19.
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“On a quarterly basis, rural poverty showed only a marginal increase during the strictest lockdown quarter of April-June 2020,” the paper said.
The paper also notes that urban poverty showed a marginal increase on an annual basis in 2020-21.
Even on a quarterly basis, it saw only a marginal increase, though it spanned four quarters with the April-June 2020 strict lockdown quarter.
“But by the April-June 2021 quarter, the decline in urban poverty had resumed. While the increase in urban poverty for four quarters corresponded to a larger decline in the output of contact-intensive industries, the free distribution of an additional 5 kg of food grains probably helped prevent a sharp decline in urban poverty.
In the paper, Mr. Panagariya and Mr. Mor analyze and criticize some existing studies that conclude that COVID-19 has led to a massive increase in poverty.
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Azim Premji University Report (2021) is a study critiquing the paper based on the Household Income and Expenditure Survey, namely the Consumer Pyramid Household Survey (CHPS) conducted by the Center for Monitoring Indian Economy (CMIE).
The paper notes that the Azim Premji University study found large-scale job losses, increases in rural, urban and overall poverty, and increases in rural, urban and overall inequality.
In its critique of this study, Mr. Panagariya and Mr. More’s paper notes that “instead of measuring poverty and inequality directly with the expenditure survey, the report invents a phenomenon study to measure them. This is strange and questionable and We do not find this persuasive at all. In its concluding remarks, the paper said, “There remains a widespread belief that there has been a massive increase in poverty in India as a result of COVID-19”.
“But this observation contrasts oddly with the fact that the poor in India live disproportionately in rural areas; They are heavily dependent on agriculture; Agriculture showed no deviation from its trend in previous years and demonstrated healthy growth throughout the COVID-19 era; And the government doubled down on its anti-poverty initiatives soon after the onset of COVID-19. It said that these factors suggest that there should be no perceptible increase in rural poverty.
The ‘Third Columbia Summit on the Indian Economy’ will be held on March 24-25 and will be addressed by Krishnamurthy Subramanian, Executive Director of the IMF, Rajesh Bhushan, Secretary in the Ministry of Health and Family Welfare, Secretary, Department for Promotion of Industry and Internal Trade. Anurag Jain, former US ambassadors to India Kenneth Juster and Frank Wisner, Consul General of India in New York Randhir Jaiswal and Director General of NCAER Poonam Gupta are among the other distinguished members from Education, Economics and Policy.