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Tens of millions of people plunge into poverty in Covid-ravaged India

(Bloomberg) – After dipping into his savings to deal with the rapid blockade of the pandemic in India last March, Manoj Kumar had just got his head above water and was earning 600 rupees ($ 8) a day as a as a construction worker in the Goa tourist hotspot. d a squirrel far enough away for a trip last month to his home village in Bihar some 1,490 miles away for a wedding. It is still there, stuck in one of the least developed states in the country, as a fierce second wave of Covid-19 triggers the world’s worst health crisis and prevents its return. One lucky day, he will get odd jobs that will earn him up to 300 rupees. But there aren’t many of these tasks left. So he takes out loans to feed and clothe his wife and three children. “Everything is in God’s hands now,” said Kumar, who told his wife to cut spending on items such as lentils, cooking oil and clothing. “I don’t know when I’ll be back. My family are worried and don’t want me to go back as cases are increasing in Goa as well. Kumar, 40, is one of millions of migrant workers who are part of India’s large undeclared informal sector, which accounts for half of its $ 2.9 trillion economy, driven by domestic demand. A prolonged Covid wave cuts incomes and wipes out the economies of people like Kumar, posing the risk of a double whammy for Asia’s third-largest economy, which is still struggling to recover from the pandemic-induced recession from last year. 8% for the year ending March, its sharpest contraction since 1952. Many economists are lowering their forecasts for the current year because rising unemployment and falling savings reduce the chances of ‘double-digit growth. Shaun Roache, chief economist for Asia-Pacific at S&P Global Ratings, reduced his prediction to 9.8% from 11% earlier. Fitch Solutions sees the economy grow 9.5%, a projection below Bloomberg’s consensus of around 11%. “A prolonged Covid-19 outbreak will hamper India’s economic recovery,” said Singapore-based Roache. “The country is already facing a permanent loss of production from its pre-pandemic trajectory, suggesting a long-term production deficit equivalent to around 10% of GDP.” With the latest outbreak caused by a new strain of coronavirus, the total number of infections in India has risen to 21.89 million, of which a third has only been added in the past three weeks alone. The daily death toll hit a record 4,187 on Saturday. Experts have warned that the crisis is likely to worsen in the coming weeks, with a pattern predicting up to 1,018,879 deaths by the end of July, quadrupling from the current official tally of 238,270. Some of the largest economic centers in the world countries to contain the epidemic, India’s poor are expected to bear the brunt again, just as they did in 2020. They have yet to recover from the lockdown ordered by Prime Minister Narendra Modi at the end from March of last year. The sudden harsh measure sparked an exodus of migrant workers from cities like Mumbai and New Delhi, as they traveled hundreds of kilometers to return home. People like Kumar usually work without a contract and often for a pittance. The so-called informal economy in India employs around 411 million workers, according to calculations by Jeemol Unni, professor of economics at Ahmedabad University, who relied on surveys by the government’s National Bureau of Statistics to arrive to this figure. While the low-wage agricultural sector employs the bulk of them, construction comes second with around 56 million people. Unprotected by unions and politicians, these workers often lack government support. After paying for their daily expenses, they don’t have much to pay for healthcare and medicine – a risky situation, especially when a pathogen takes lives and sends thousands of people to intensive care in overcrowded and short-bedded hospitals. and the fall in income will have an impact on domestic consumption, which accounts for nearly 60% of GDP. A study by Nikhil Gupta, economist at Mumbai-based brokerage firm Motilal Oswal Financial Services Ltd., found that Indian household savings fell to 22.1% of GDP in the quarter through December, compared to 28.1% in the three months ended June of last year. Figures for the year show that savings growth in India has been lower than that of the United States, the United Kingdom and Japan, he said. “A slower rise in household savings, coupled with a similar or slower decline in consumption, confirms weak income growth in India,” he said. mentionned. “If this is the case, the contribution of pent-up demand to the resumption of growth would also be limited in India relative to other countries.” Data shows that the unemployment rate in April rose from 6.5% to almost 8% in March, with more than seven million people leaving the workforce last month, according to data from the Center for Monitoring Indian Economy Pvt. ., a private research company. Due to all the turmoil that started last year, income inequality is widening in India. A study by the Pew Research Center has shown that around 75 million people have fallen into poverty since the start of the pandemic. The second wave is about to crush even more. For the study, Pew considered daily incomes of 150 rupees or less as poor, 151 to 750 rupees as low income, and 3,750 rupees and above as high income. A study by Azim Premji University in Bangalore showed even more figures. alarming. About 230 million people slipped below the national daily minimum wage threshold of 375 rupees during the pandemic, he said. Although India may yet emerge as one of the fastest growing economies fast in the world, it will also be one of the most unequal countries, Oxfam. , said a nonprofit. Stephen Schwarzman, president of Blackstone Group Inc., said in an interview last month that he was “confident” in India’s long-term prospects. The private equity firm, which has invested billions of dollars in the country and owns several of the country’s large office towers, said it would step up its business in the country. “We will invest more over the next 10 years than what we have invested in the previous period,” he said. Duvvuri Subbarao, former governor of India’s central bank, said the conflicts faced by workers in the informal economy could harm India in the long run. growth prospects over time. “Inequalities have intensified because the formal sector has almost normalized while the informal sector remains in difficulty,” he said. Slower growth would be bad news for workers like AK Singh, who was a cook for a monthly salary of around Rs 20,000 in a restaurant in Mumbai. He recently fled to his hometown of Gorakhpur in northern India to start a tire business, for which he is awaiting a loan. “I used some of my savings and the money I received from my last salary,” he said. “But there has been a blockage here as well since last week. My shop was barely open for two days during the week. What will we gain from this? (Updates with the latest data on coronavirus deaths in seventh paragraph) For more articles like this please visit us at bloomberg.com Subscribe now to stay ahead with the news source most reliable business. © 2021 Bloomberg LP



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