US economic study presents India’s income inequality decreases post-2020 lockdown as rich get poorer

The study’s most amazing finding was that income inequalities have declined in the months since the pandemic lockdown was put off which seems to stand in contrast with what other recent studies have stated about income inequalities in the nation.

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US economic study presents India’s income inequality decreases post 2020 lockdown as rich get poorer

Millions of Indians went into poverty during the Covid-19 pandemic, but the period post the starting of strict lockdown also witnessed a decline in income inequality in the nation, a working paper published last month has started.

The paper, titled Inequality in India declined during Covid’, posted by the National Bureau of monetary research (NBER), a US-primarily based non-earnings that makes a speciality of accomplishing and disseminating research on economics, stated the pandemic in India became associated with a decline in inequality in senses. the primary changed into that Indians from better profits companies had larger relative discounts in earnings than the terrible, and the second one was that intake inequality additionally declined, albeit simplest marginally so.

Also Read: Inequality Report:  India is ‘very unequal,’ with the top 10% controlling 57% of national income

The non-peer-reviewed study was conducted by 3 scholars — Arpit Gupta from the Stern School of Business, University of New York, and Anup Malani and Bartosz Woda from the University of Chicago Law School.

The researchers’ crucial source of data was the Consumer Pyramids Household Survey (CPHS) which was conducted by the Centre for Monitoring Indian Economy, which includes a sample of 1.97 lakh households, with information every month on their finances available from January 2015 to July 2021.

The study’s most amazing finding was that income inequalities have declined in the months since the pandemic lockdown was put off which seem to stand in contrast with what other recent studies have stated about income inequalities in the nation.

Income inequality is actually the average gap between the incomes of the rich and the poor. This ‘inequality’ falls if the incomes of the rich fall, or if the incomes of the poor increase.

The authors say that there was a “stark increase in poverty” during the pandemic but also mentioned out that “increases in poverty are not a sufficient statistic for inequality”.

According to the study, income poverty in urban areas increased from 40% before the pandemic to nearly 70% during the lockdowns. In this case, poverty was examined, by the World Bank’s $1.9 a day (or less) benchmark. After the lockdown, poverty decreased and income and consumption increased, “but it did not recover to pre-pandemic levels”, the researchers stated.

However, despite the rise in poverty, income inequality decreased in both urban and rural areas, largely due to the earnings of richer households falling.

“In rural areas, the relative income of individuals from top-quartile households fell more before, fell further during, and remained more depressed after the lockdown compared to incomes of those from lower quartiles. Urban areas show a similar pattern, except that the dip during the lockdown was identical across quartiles,” the study stated.

Similarly, the study presents that consumption inequality even fell during the lockdown period, but not at all fast as income inequality.

According to the study, the income’s sources of India’s rich get “disproportionately” from services and capital income (basically wealth derived from wealth, like dividends and interest), both of which were “disproportionately affected during the pandemic”. Unlike for the rich, capital incomes do not form a maximum share in the incomes of much poorer households.

Request for the type of labour supplied by the rich even dropped certainly more than for the poor. “The rich experienced larger declines in wages and, after India’s lockdown, lower employment rates,” the study mentioned.

The employment rate decreased more for the poorer sections of society during the lockdown, but they even recovered faster. As a matter of fact, the employment rate “recovered almost completely for all quartiles — except the top quartile — after the lockdown,” the study stated.

It added that the performance of the lower scale was “particularly remarkable” since India, unlike the United States, had “little fiscal stimulus in the form of income transfers”.

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US economic study presents India’s income inequality decreases post-2020 lockdown as rich get poorer
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The study’s most amazing finding was that income inequalities have declined in the months since the pandemic lockdown was put off which seems to stand in contrast with what other recent studies have stated about income inequalities in the nation.
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THE POLICY TIMES
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