400 million Indians at risk of falling into poverty during crisis

As many as 400 million Indians, including migrant workers and daily wage earners, are at risk of being pushed deeper into poverty because of the covid-19 pandemic, the International Labour Organization (ILO) said.

The Geneva-based body’s warning comes at a time when the coronavirus outbreak continues to spread across India and a complete relaxation of the lockdown post April 14 looks bleak.

The forecast indicates that there may be lasting economic damage from the shock caused by the covid-19 pandemic, including widespread joblessness. Loss of wages, in turn, is likely to trigger a slump in demand.

Economists said poverty will be a bigger challenge for India and may set the economy back by years.

“Economic growth and poverty are directly linked and we now know that how rating agencies have downgraded the GDP (gross domestic product) growth rate. Besides, if unemployment data is showing that it has tripled in last three weeks, then it is easily understandable that poverty must have gone up significantly," said Arup Mitra, a professor of economics at Institute of Economic Growth in New Delhi.

India, which has a relatively high proportion of workers outside the formal workforce, needs to be on guard as workers are facing a drastic reduction in working hours, wage cuts and layoffs, the ILO said.

“In India, with a share of almost 90% of people working in the informal economy, about 400 million workers in the informal economy are at risk of falling deeper into poverty during the crisis," ILO said.

“In India, Nigeria and Brazil, the number of workers in the informal economy affected by the lockdown and other containment measures is substantial. Current lockdown measures in India, which are at the high end of the University of Oxford’s covid-19 Government Response Stringency Index, have impacted these workers significantly, forcing many of them to return to rural areas," it added.