WORLD NEWS
05/15/2020 09:11 EDT

EXCLUSIVE: Coronavirus Could Reduce 260 Million Indians To Poverty, Say Oxford University Researchers

Officials from the United Nations Development Programme (UNDP) have backed these estimates by the Oxford Poverty and Human Development Initiative.

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A group of daily wage labourers walk along an expressway on the outskirts of New Delhi on March 26, 2020.

Sambalpur, ODISHA — At least 260 million people in India could be pushed into poverty due to the economic fallout from coronavirus, putting at risk historic gains made in poverty alleviation, according to estimates from United Nations and Oxford Poverty and Human Development Initiative (OPHI).

The 2019 UN Development Programme’s Multidimensional Poverty Index (MPI), developed in collaboration with OPHI at the University of Oxford, had reported in a study last year that India lifted 271 million people out of poverty between 2006 and 2016. This was the fastest absolute reduction in poverty among ten countries encompassing close to 2 billion people, the researchers noted, even as 369 million Indians remained poor, the highest globally.

But as coronavirus batters India’s economy and hundreds of millions of Indians struggle to eke out a living under a punitive national lockdown, more than 260 million Indians—who are presently classified as vulnerable to poverty—are at risk of becoming the new poor, according to researchers such as the OPHI’s Sabina Alkire who worked on the 2019 numbers.

Unlike income poverty, multidimensional poverty does not rely on any single indicator. To track poverty, it takes into account multiple deprivations experienced by people in health, education and standard of living across 10 indicators — nutrition, child mortality, years of schooling, school attendance, sanitation, cooking fuel, drinking water, electricity, housing and assets. People deprived in at least a third of the indicators, or 33% of the indicators, are classified as poor.

Under global MPI, people who experience deprivations in at least 20-33% of the indicators are classified as vulnerable. In other words, these are people who remain close to the poverty line. 

In 2015-2016, according to global MPI, 27.9% of people in India were poor while a staggering 19.3% were classified as vulnerable to poverty. 

Sabina Alkire, director at OPHI and the lead author of the 2019 study, told HuffPost India that people who are vulnerable are at risk from a variety of factors as Covid-19 spreads in India.

“Three MPI indicators are also covid-19 risk factors,” Alkire said. “These are sharing a household with a person who is malnourished, lack of safe drinking water and clean cooking fuel.”

According to Alkire, 994 million Indians — nearly one billion — experienced deprivations in at least one of the above three indicators in 2019. “If we focus on the 994 million, and observe that unemployment will short-circuit the financial flows of many, there is indeed cause for concern that poverty will rise.”

But a much bigger cause for concern would be rising malnutrition.

“The virus creates two challenges: threats to life among the poor, and increases in poverty. The biggest cause for concern is the predictable short-term surge in malnutrition. [Any increase] would have a big impact on MPI because it weighs three times more than assets or drinking water,” Alkire said. “Plus, it is very important to prevent malnutrition—particularly in children because it affects their brain development.”

Bishwa Nath Tiwari, a senior official with UNDP’s Human Development Reports at the Bangkok Regional Office, said that malnutrition would increase among vulnerable Indians— including the poor and informal workers — owing to immediate income losses due to a nationwide shutdown and disruptions in food supply chains. 

A 10% increase in malnutrition among people in poor or vulnerable households in India—who were not previously deprived in nutrition—would result in 42 million people falling into poverty, according to a simulation developed by researchers at OPHI. But if malnutrition increased by 50%, and half of the school-going children were out of school, poverty would rise by 187 million.

On March 24, Prime Minister Narendra Modi ordered a nationwide lockdown—which has since been extended twice as Covid-19 cases continue to increase in India—putting an immediate freeze on economic activity and disrupting India’s huge informal sector workforce.

On May 14, Finance Minister Nirmala Sitharaman announced monetary and fiscal support worth Rs 20 lakh crore estimated at 10% of the GDP. But the big ticket stimulus measures appear intended to placate taxpayers, micro, small and medium-sized companies, and power companies. The support package includes a slew of measures in agricultural and business reforms.

These measures were announced 45 days after India’s government unveiled an initial relief package worth 1.7 lakh crore rupees, featuring a variety of cash transfers and grain distribution measures. But many economists criticised it then, calling for the government to spend more to help hundreds of millions of Indians who were adversely affected by the lockdown.

Economists, who have been consistently calling for increased monetary measures for hundreds of millions of India’s informal sector workers, are disappointed after Wednesday’s stimulus measure failed to shield India’s poor and vulnerable population.

“The relief measures will do nothing to ease the blow of the lockdown on the most vulnerable,” Reetika Khera, a professor of economics at Indian Institute of Management in Ahmedabad, told HuffPost India. “My main worry is that by the time the government has satisfied all the industry demands, there will be nothing left for those who need it most.”

Reports and analysis suggest that even before the pandemic set in, millions of Indians were not getting enough food to eat. For instance, the UN’s World Food Program estimates that about 250 million Indians were already undernourished.

After the pandemic set in, pushing up prevalence of hunger across the country, the government called for increased grain distribution through the Public Distribution System (PDS) under the Pradhan Mantri Garib Kalyan Anna Yojana.

But the government’s reliance on 2011 census data to target beneficiaries has left out close to 100 million people from receiving the benefits, analysis by economists Jean Drèze, Reetika Khera, and Meghana Mungikar suggests.

Himanshu, an economist at New Delhi’s Jawaharlal Nehru University, says that the people who are left out could number even more than 100 million. “It is true that malnutrition and hunger is likely to increase [but] we don’t know how [by] much or whether this is temporary or likely to persist. Most likely malnutrition will increase in the long run.”

Khera of the Indian Institute of Management in Ahmedabad, said that even though the numbers are alarming, she is not surprised to find out that more than 260 million Indians could fall into poverty.

“Multidimensional poverty includes health and education indicators that have longer term effects. If children fall out of school their life chances for the rest of their lives are going to be affected. Similarly, malnutrition is an intergenerational issue - poorly nourished mothers will have poorly nourished children,” Khera told HuffPost India.

In essence, these numbers suggest that the modest gains that we had made on improving people’s wellbeing over the past decade or so are at risk.”

The share of India’s population living in multidimensional poverty in 2006 stood at 55.1%, or about 640 million people. 

Khera said that India’s initial relief package, which accounted for less than 1% of GDP, was “grossly inadequate in a country where nearly half of the population lives so close to the edge,” and called for an urgent universalisation of the PDS.

This warning was also echoed by economists Amartya Sen, Raghuram Rajan and Abhijit Banerjee in an article published in the Indian Express, in which they collectively warned that “huge number of people will be pushed into dire poverty or even starvation by the combination of the loss of livelihoods and interruptions in the standard delivery mechanisms.”

“I don’t think we have any data whatsoever to make a prediction on number of persons or households which are affected or likely to fall into poverty,” Himanshu told HuffPost India, but pointed out that malnutrition is bound to increase, for it was even evident in the leaked findings of the National Statistical Office (NSO)’s consumption survey of 2017-2018.

In February this year, NITI Aayog and Ministry of Statistics and Programme Implementation (MoSPI) indicated that they would use MPI to assess the incidence of poverty in India, years after the Modi government dropped the report of the C. Rangarajan Committee after it showed poverty was increasing in India.

“Even without the pandemic, the number of poor by income/consumption poverty was already showing increase along with decline in real food consumption. There is every likelihood of these trends persisting and getting worse after the economic slowdown and particularly after the pandemic,” Himashu said.

But Alkire says that even in the midst of a pandemic that threatens to reverse almost all the gains made in poverty alleviation over years, there is hope for recovery. “I think with some emphatic policy action in terms of multidimensional poverty, it would be possible to recover if rising malnutrition is covered very powerfully by the government.”

According to Alkire—who also calls upon the government to treat the pandemic as an opportunity to end poverty—if malnutrition is tackled with strong policy measures now, then within a time period of six months, we could drastically reduce multidimensional poverty, possibly leading to a historic change.

In the intervening decade of 2006-2016, when India was also clocking high economic growth rates, 271 million Indians moved out of poverty. Yet, according to Alkire, there is little or no association between economic growth and reduction in multidimensional poverty, and what matters is the scale of public expenditure. “But without growth, a government cannot have the capacity to spend more.”

Hence, Alkire says that public expenditure to mitigate hunger and invest in public services are vital to minimize increases in, or better, reduce, levels of poverty in India.

“What is very clear is that without certain public services, India wouldn’t have this reduction in poverty [between 2006-2016],” Alkire said.