Why India is looking at a bleak future, falling behind Bangladesh
On May 31, India’s National Statistical Office released its finding that the country’s GDP contracted by 7.3% over the past year, signifying the first reversal since 1979, and the greatest retrenchment since independence in 1947.
The shocking extent of damage was somewhat unexpected, but trends have been unremittingly negative since the badly bungled demonetization in 2016, closely followed by an equally mismanaged implementation of the intricate Goods and Services Tax (GST).
That is how, in less than five years, India was hamstrung from the fastest-growing big economy in the world to the regional straggler that is well behind Bangladesh in both per-capita income and optimism.
Beyond the numbers, an immense human tragedy spills over with incalculable suffering.
Even before Covid-19’s devastating “second wave,” Pew Research Centre warned “the middle class in India is estimated to have shrunk by 32 million in 2020 as a consequence of the downturn, compared with the number it may have reached absent the pandemic. This accounts for 60% of the global retreat in the number of people in the middle income tier (defined here as people with incomes of $10.01-$20 a day).”
Pew said “it was anticipated that 99 million people in India would belong in the global middle class in 2020. A year into the pandemic, this number is estimated to be have been 66 million, cut by a third. Meanwhile, the number of poor in India is projected to have reached 134 million, more than double the 59 million expected prior to the recession.”
That bleak picture is further darkened by Azim Premji University’s State of Working India 2021 report, estimating that, during the pandemic, 230 million Indians have fallen below the poverty line, working women suffered extraordinary setbacks (only 19% remained employed, and 47% lost their jobs permanently), and nearly half of the country’s salaried workers dropped into the informal sector of daily-wage labour or “self-employment.”
There is no doubt the impact of all this falls vastly disproportionately on the hundreds of millions already in poverty. The Premji University report’s authors delineate how average incomes have fallen across the board, but any kind of loss becomes catastrophic when the base is already low, directly resulting in “severe reduction in welfare” such as food insecurity, indebtedness, and plummeting levels of education and health care.
In his Indian Express column this week, Pratap Bhanu Mehta writes: “For the first time in a generation, young India is looking at a bleaker future than their parents did in terms of employment and income.”
He points to the “remarkable fact that this fundamental triad of slower growth prospects, potentially shrinking middle class and rising poverty has been kept out of public political consciousness. The poor in India were always invisible. But the degree of economic and ideological obfuscation is such that even the normally influential middle class’s tale of economic uncertainty has become invisible.”
Mehta concludes that “we are in completely uncharted new territory.”
That -- as Shreevatsa Nevatia illuminates with great pathos in his Letter from Kolkata in The Economist’s latest 1843 Magazine -- includes “laying bare the great fiction of middle-class life in India” and perhaps to increased awareness that we are in this predicament together.
Nevatia’s household help contracted Covid-19 at the same time as his parents, which is when, “I realized with shame [that] in all the years they had worked for us we had never offered Saraswati and Nageshwar any medical insurance [and] never planned what to do if either of them needed a modern, well-equipped hospital.” The helpers recuperated under his care, until “to both my relief and discomfort, the old order re-established itself.”
Via email to me, Nevatia explained: “I see a difference between ‘penury’ and ‘poverty’, and I also see a difference between ‘poverty’ and ‘deprivation.’ If all my sources of income were to dry up tomorrow, my middle-class support systems would ensure I wouldn’t be poor, despite my pennilessness. It’s a different story for Saraswati and Nageshwar.”
He continued: “Their salaries, though meagre in comparison to entitled and fortunate individuals like me, place them slightly above the poverty line. If something were to happen to them -- an accident, say, or a terrible illness -- they would not be able to work. Their labour is their only safety net, one that protects them from precariousness and the tyranny of privilege. Without it, there is very little sustenance.”
Nevatia said: “The middle class might be porous, yes, but that doesn’t mean that those within it don’t guard its doors fiercely. The pandemic might be forcing people out of this middle class, but history shows that it is exceptionally hard for one to get in, too. Yes, of course I feel anxious. If I were to be penniless tomorrow, Saraswati and Nageshwar might suffer, too. Our destinies, like our everyday, I see, are tied.”
Vivek Menezes is a writer based in Goa, India.