INTRODUCTION
The outbreak of corona virus disease 2019 (COVID-19) has created a global health crisis that has had a deep impact on the way we perceive our world and our everyday lives.Not only does the risk of contagion and transmission trends challenge our sense of autonomy, but its long-lasting, global social and financial consequences arising from the orchestral and indirect consequences of disease still highlights a big issue.In particular, GDP forecasts for most regions and nations have already been seen declining, led by shocks to both domestic demand and output and rapid decreases in the distribution of products and services, as well as individuals and lately resources.
WELFARE IMPACTS OF COVID-19 ON INDIVIDUALS AND HOUSEHOLDS
The COVID-19 pandemic by shelter-in-place orders and social distancing guidelines has created a disruptive new normal for everyone. But those requirements aren’t only burdensome for the billions of urban poor; they’re practically impractical.
Those are also the possible impacts on individuals that could be the explanation for the significant rise in Indian poverty
1. Service disruptions
with adverse impact on non-monetary dimensions of welfare:
Potential saturation of the health system in countries with high incidence of COVID-19, leading to inadequate care for non-communicable diseases.
Disruptions in mobility, due to quarantines and other containment measures which may drastically reduce public and private transportation services.
Business suspension such as tourism, hotels, construction etc. causes a sudden halt to the earnings of the poor who rely on daily wages.
2. Impact on labor income
The direct effect of lost earnings because of illness or the need to take care of sick household members
The indirect effect of shocks on earnings and employment, caused by decreasing aggregate demand and disrupting supply. The impacts can take one or more of the following forms:
(a) decrease in the quantity of work, either hours (intensive margin) or work (extensive margin)
(b) decrease in wages, which is unlikely to occur in the short run for salaried 2 workers but may occur over time due to furloughs or wage cuts by some employers to avoid layoffs
(C) a decrease in self-employed income due to a decrease in economic activity (sales, production) in micro and small enterprises due to a decrease in demand and a disruption in supply of inputs or to restrictions on mobility, in particular for migrants engaged in seasonal farming.
3. Impact on non-labor income
Decline in international (and domestic) remittances resulting from the economic impact of the crisis in places where migrants are employed and potentially in private remittances as economic stress can reduce household transfers or charitable support.
Potential shift in public transfers – for example, increase as governments react to reduce shock impacts, or decrease as budgetary constraints force countries to choose between current social security and health care.
4. Significant influence on consumption
Changes in prices and shortages of basic consumer products and services (such as food and medicines) due to market disturbances due to decreases in trade (including limits on imports or exports) or a collapse in domestic production. This impact is in addition to the indirect welfare impact of any rise in production input prices which would influence production costs and labor income
Increase in out-of-pocket healthcare costs for those directly affected by the pandemic, which can reduce consumption of other necessities by households with credit constraints
5. longer-run dynamic effects
There are also longer-term structural consequences which can have highly adverse consequences on individuals’ economic mobility and household movements to and from poverty. For example, a loss of income over a period of time can significantly limit poor households’ ability to invest in children’s education, and/or in children’s and mothers’ nutrition and health, with possible negative impacts on children’s long-term outcomes like lifetime earnings.
The impact on economic inequality
Coronavirus is going to go down, but the kind of world that it’s going to leave behind is going to be very different than now. There are widely differing views on how the new world will look, with each expert looking at it from their own perspective. In the second week of April 2020, the International Labor Organization (ILO) claimed that about 400 million workers from the informal sector in India are likely to be pushed deeper into poverty because of Covid-19. There is no dispute that poverty in the country will worsen.
As the central government led by Narendra Modi continues to pick pieces in the puzzle to rein in India’s corona virus pandemic, the economic costs of the nationwide lockdown on millions of poor may be devastating. In effect, the corona virus pandemic and the economic consequences of an extended shutdown could increase to 915 million the ranks of the poorest in India.
Poverty gap:
The poverty gap at India’s national poverty line (percent) was registered at 4 percent in 2011, which is likely to rise as a result of the COVID19 pandemic due to job losses, market disruptions, etc.
Lorenz curve:
The Lorenz curve is likely to flatten in comparison to the previous years , resulting in more uneven distribution and Gini coefficient increases. This will lead to further inequality and decline in the Indian economy.
Gini Coefficient:
According to the World Bank, as of March 2020, India’s Gini Index is 35.2 (0.35). Currently, however, it is projected to be close to 0.50, the highest value to date. Lesotho currently holds the country with the highest Gini Coefficient distinction at 0.632.Gini’s 2011-12 revenue of 0.55 puts India among the world’s unequal nations. Because of the COVID-19 pandemic, Gini’s income is likely to rise as a result of increasing inequality in the country as poor people lack employment and basic needs, whereas rich people may still lose some assets but are not much affected as compared to poor.
Poverty lines:
Projections based on a recent analysis by researchers at the United Nations University (UNU) show that, in the worst case scenario, 104 million more people in India could fall below the World Bank-determined poverty line of $3.2 a day for lower-middle-income countries. At present, 60 percent of India’s population, or an estimated 812 million people, live below that poverty line.
India’s overall poverty rate rises to 46.3%, i.e., more than twice the 2011-12 levels, and higher than even the 1993-94 levels (see graphic); and (ii) this means that India will have an additional 354 million poor, taking the total count of the country’s poor to about 623 million.
Conclusion:
The unforeseen complexity of the COVID-19 crisis and the pace with which governments initiate policies and initiatives to tackle its effects, it is critical that mechanisms be placed in place to allow real-time analysis of the execution and learning of policies and programs. Given this situation where the majority of the poor are pushed below the poverty line, the government should launch some schemes to at least provide access to all people’s basic needs. Inequality is no longer merely a social and ethical problem because it is fundamental to the operation of a democratic community to reduce inequality. It is also an economic concern which affects growth and poverty outcomes.
