As the world continues to be ravaged by the covid pandemic, more than a year on, it is becoming increasingly evident that the greatest burden has fallen on the global poor.
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Even the poor in rich countries, which have relatively secure social safety nets and well developed public health systems, have seen a sharp drop in incomes and suffered the hardest impact of the virus itself, since they are not in occupations in which work-from-home is feasible.
While an investment banker, a senior civil servant or university professor can safely work remotely, this is obviously not an option for a food-delivery worker, a store clerk, or a front line medical worker.
If the impact on the poor in rich countries has been severe, in lower and lower middle income countries, it has been nothing short of devastating. A recent study by Pew Research Center compares the impact in China and India.
While China’s gross domestic product (GDP) rebounded in 2020, after an initial drop on account of the pandemic, India’s GDP collapsed last fiscal year, but is projected to revive in 2021-22. This difference helps account for the big difference in impact on the poor in the two countries.
Pew’s methodology is a counterfactual one—that is, it computes the change in the number of poor and those in other income strata as compared to a scenario of normal GDP growth in the absence of the pandemic and subsequent lockdowns.
In other words, this is a conceptually clean methodology for determining the pandemic’s impact on poverty. The survey’s definition of those in poverty is the standard international definition of a daily income (actual or imputed) of $2 or less.
For China, the study shows a very modest increase in the number of people in absolute poverty—only a million or so—whereas 30 million more people were pushed into the low-income (but not absolutely poor) category. Meanwhile, 10 million people fell out of the Chinese middle class, 18 million from the upper middle class, and 3 million from the high-income category.
By contrast, for India, a staggering 75 million people were pushed back into poverty by the covid crisis—this is almost 60% of the global total increase in poverty caused by the pandemic. India’s lower middle income category lost 35 million people, and the country’s middle class shrank by 32 million, many of these, evidently, accounting for those who slipped back into poverty.
Additionally, there was a loss of 7 million people from the upper middle class, and a drop of 1 million from the count of high-income earners.
The covid crisis in India has undone years of progress in combating poverty and also reversed several years of gains in drawing those in lower and lower middle income groups into the country’s middle class.
If these statistics are not grim enough, there is now added concern globally of a looming sovereign debt crisis, especially in middle- income emerging countries. In a 29 March interview with the Financial Times, United Nations secretary-general António Guterres pointed to the fact that large, middle-income countries such as Brazil and South Africa have borrowed heavily in domestic bond markets.
There is little danger of an external debt crisis, but there is a danger all the same, as maturities are coming down in many large middle-income countries such as Brazil and South Africa.
Shortened maturities may reduce the interest service cost of debt, given how low short rates are, but they mean that borrowings must be rolled over more frequently, which can heighten the possibility of a crisis in a context of greater macroeconomic instability.
While India is not in such crisis territory, unrestrained fiscal profligacy and an increasing debt-to-GDP ratio can add to macroeconomic pressures in the not-so-distant future, especially if rising retail inflation forces the Reserve Bank of India to raise its policy rate to damp it down, thus raising borrowing costs.
Taking a longer view, the global crisis and its aftermath have impeded the process of economic convergence between richer and poorer economies, a beneficial impact of globalization that had been in train, at least in fits and starts, since the 1990s.
India, in particular, suffered a serious GDP contraction last year, and even the prospect of higher growth this year, which could give India back its crown as the world’s fastest growing major economy, has reduced the chances of achieving the government’s putative goal of making India a $5 trillion economy anytime soon.
Even a month or so ago, there was somewhat greater optimism, thanks to vaccine rollouts around the world, over a reduction in the covid infection rate in many countries and the easing of pandemic restrictions. However, cases are again on the rise in many places, and new variants and mutations of the virus appear to be more resistant than earlier thought to our existing vaccines.
India, in particular, is seeing an alarming increase in cases and increased stress on its healthcare system. If this necessitates renewed curbs and lockdowns, as have been imposed partially in some states, it will almost certainly lead to a significant downward revision in India’s growth forecast for the current fiscal year.
Lower growth, in turn, foretells a rather grim year ahead for India’s poor.
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- In terms of Equity, in the Large States category, Chhattisgarh has the best Delta rate on Equity indicators, this is also reflected in the performance of Chhattisgarh in the Equity Pillar where it ranks 4th. Following Chhattisgarh is Odisha ranking 2nd in Delta-Equity ranking, but ranks 17th in the Equity Pillar of PAI 2021. Telangana ranks 3rd in Delta-Equity ranking even though it is not a top performer in this Pillar in the overall PAI 2021 Index. Jharkhand (16th), Uttar Pradesh (17th) and Assam (18th) rank at the bottom with Uttar Pradesh’s performance in line with the PAI 2021 Index
- Odisha and Nagaland have shown the best year-on-year improvement under 12 Key Development indicators.
- In the 60:40 division States, the top three performers are Kerala, Goa and Tamil Nadu and, the bottom three performers are Uttar Pradesh, Jharkhand and Bihar.
- In the 90:10 division States, the top three performers were Himachal Pradesh, Sikkim and Mizoram; and, the bottom three performers are Manipur, Assam and Meghalaya.
- Among the 60:40 division States, Orissa, Chhattisgarh and Madhya Pradesh are the top three performers and Tamil Nadu, Telangana and Delhi appear as the bottom three performers.
- Among the 90:10 division States, the top three performers are Manipur, Arunachal Pradesh and Nagaland; and, the bottom three performers are Jammu and Kashmir, Uttarakhand and Himachal Pradesh
- Among the 60:40 division States, Goa, West Bengal and Delhi appear as the top three performers and Andhra Pradesh, Telangana and Bihar appear as the bottom three performers.
- Among the 90:10 division States, Mizoram, Himachal Pradesh and Tripura were the top three performers and Jammu & Kashmir, Nagaland and Arunachal Pradesh were the bottom three performers
- West Bengal, Bihar and Tamil Nadu were the top three States amongst the 60:40 division States; while Haryana, Punjab and Rajasthan appeared as the bottom three performers
- In the case of 90:10 division States, Mizoram, Assam and Tripura were the top three performers and Nagaland, Jammu & Kashmir and Uttarakhand featured as the bottom three
- Among the 60:40 division States, the top three performers are Kerala, Andhra Pradesh and Orissa and the bottom three performers are Madhya Pradesh, Jharkhand and Goa
- In the 90:10 division States, the top three performers are Mizoram, Sikkim and Nagaland and the bottom three performers are Manipur and Assam
In a diverse country like India, where each State is socially, culturally, economically, and politically distinct, measuring Governance becomes increasingly tricky. The Public Affairs Index (PAI 2021) is a scientifically rigorous, data-based framework that measures the quality of governance at the Sub-national level and ranks the States and Union Territories (UTs) of India on a Composite Index (CI).
States are classified into two categories – Large and Small – using population as the criteria.
In PAI 2021, PAC defined three significant pillars that embody Governance – Growth, Equity, and Sustainability. Each of the three Pillars is circumscribed by five governance praxis Themes.
The themes include – Voice and Accountability, Government Effectiveness, Rule of Law, Regulatory Quality and Control of Corruption.
At the bottom of the pyramid, 43 component indicators are mapped to 14 Sustainable Development Goals (SDGs) that are relevant to the States and UTs.
This forms the foundation of the conceptual framework of PAI 2021. The choice of the 43 indicators that go into the calculation of the CI were dictated by the objective of uncovering the complexity and multidimensional character of development governance
The Equity Principle
The Equity Pillar of the PAI 2021 Index analyses the inclusiveness impact at the Sub-national level in the country; inclusiveness in terms of the welfare of a society that depends primarily on establishing that all people feel that they have a say in the governance and are not excluded from the mainstream policy framework.
This requires all individuals and communities, but particularly the most vulnerable, to have an opportunity to improve or maintain their wellbeing. This chapter of PAI 2021 reflects the performance of States and UTs during the pandemic and questions the governance infrastructure in the country, analysing the effectiveness of schemes and the general livelihood of the people in terms of Equity.
Growth and its Discontents
Growth in its multidimensional form encompasses the essence of access to and the availability and optimal utilisation of resources. By resources, PAI 2021 refer to human resources, infrastructure and the budgetary allocations. Capacity building of an economy cannot take place if all the key players of growth do not drive development. The multiplier effects of better health care, improved educational outcomes, increased capital accumulation and lower unemployment levels contribute magnificently in the growth and development of the States.
The Pursuit Of Sustainability
The Sustainability Pillar analyses the access to and usage of resources that has an impact on environment, economy and humankind. The Pillar subsumes two themes and uses seven indicators to measure the effectiveness of government efforts with regards to Sustainability.
The Curious Case Of The Delta
The Delta Analysis presents the results on the State performance on year-on-year improvement. The rankings are measured as the Delta value over the last five to 10 years of data available for 12 Key Development Indicators (KDI). In PAI 2021, 12 indicators across the three Pillars of Equity (five indicators), Growth (five indicators) and Sustainability (two indicators). These KDIs are the outcome indicators crucial to assess Human Development. The Performance in the Delta Analysis is then compared to the Overall PAI 2021 Index.
Key Findings:-
In the Scheme of Things
The Scheme Analysis adds an additional dimension to ranking of the States on their governance. It attempts to complement the Governance Model by trying to understand the developmental activities undertaken by State Governments in the form of schemes. It also tries to understand whether better performance of States in schemes reflect in better governance.
The Centrally Sponsored schemes that were analysed are National Health Mission (NHM), Umbrella Integrated Child Development Services scheme (ICDS), Mahatma Gandh National Rural Employment Guarantee Scheme (MGNREGS), Samagra Shiksha Abhiyan (SmSA) and MidDay Meal Scheme (MDMS).
National Health Mission (NHM)
INTEGRATED CHILD DEVELOPMENT SERVICES (ICDS)
MID- DAY MEAL SCHEME (MDMS)
SAMAGRA SHIKSHA ABHIYAN (SMSA)
MAHATMA GANDHI NATIONAL RURAL EMPLOYMENT GUARANTEE SCHEME (MGNREGS)