Indian middle class shrinks by 32 million due to Covid-19 pandemic: Pew

Report shows the size of global middle class fell for the first time since 1990s

Financial woes brought by last year's coronavirus pandemic have pushed about 32 million Indians out of the middle class, undoing years of economic gains, a report showed on Thursday, while job losses pushed millions into poverty.

The number of Indians in the middle class, or those earning between $10 and $20 a day, shrunk by about 32 million, compared with the number that could have been reached in the absence of a pandemic, the US-based Pew Research Centre said.

A year into the pandemic, the numbers of those in the middle class has shrunk to 66 million, down a third from a pre-pandemic estimate of 99 million, it added.

“India is estimated to have seen a greater decrease in the middle class and a much sharper rise in poverty than China in the Covid-19 downturn,” the Pew Research Centre said, citing the World Bank's forecasts of economic growth. Nearly 57 million people had joined the middle income group between 2011 and 2019, it added.

In January last year, the World Bank forecast almost the same level of economic growth for India and China, at 5.8 per cent and 5.9 per cent respectively, in 2020.

But nearly a year into the pandemic, the World Bank revised its forecast this January, to a contraction of 9.6 per cent for India and growth of 2 per cent  for China.

India faces a second wave of infections in some industrial states, after a decline in cases until early this year, and its tally of 11.47 million is the highest after the United States and Brazil.

The Pew Centre estimated the number of poor people, with incomes of $2 or less each day, has gone up by 75 million as the recession brought by the virus has clawed back years of progress. A rise of nearly 10 per cent in domestic fuel prices this year, job losses and salary cuts have further hurt millions of households, forcing many people to seek jobs overseas.

In China, however, the fall in living standards was modest as numbers in the middle-income category probably decreased by 10 million, while poverty levels remained unchanged, the report added.

Reverse in global trend

Researchers found that the ranks of the global middle class — those earning $10-$50 per day — fell by 90 million people to almost 2.5 billion last year. That helped swell the ranks of the poor, or those living on less than $2 a day, by 131 million. 

If the estimate holds true in actual World Bank income data still being gathered, it would mark an end to a pattern that has seen the global middle class expand without fail since the 1990s thanks to the rapid growth of developing economies like China and India.