India's Poor Lost Half Their Income in Last 5 Years, Rich Got Richer: Survey

The upper-middle-class and rich households saw their incomes rise by 7 percent and 39 percent, respectively.

A new survey, which highlights the economic impact of the pandemic on Indian households, found that the income of the poorest 20 percent of the country declined by 53 percent in 2020-21 from that in 2015-16.

The survey, conducted by the People's Research on India's Consumer Economy (PRICE), a Mumbai-based think tank, also shows that in contrast, the same period saw the annual household income of the richest 20 percent grow by 39 percent.

Conducted between April and October 2021, the survey covered 20,000 households in the first stage, and 42,000 households in the second stage. It spanned over 120 towns and 800 villages in 100 districts.

Income Erosion in All Households Except the Rich Ones

The survey indicated that while the poorest 20 percent households witnessed an income erosion of 53 percent, the lower-middle-class saw a 39-percent decline in household income. The income of the middle-class, meanwhile, reduced by 9 percent.

However, the upper-middle-class and richest households saw their incomes rise by 7 percent and 39 percent, respectively.

The survey also showed that the richest households, on an average, accumulated more income per household as well as pooled income in the past five years than any other five-year period since liberalisation.

While the richest 20 percent accounted for 50.2 percent of the total household income in 1995, the survey shows that their share jumped to 56.3 percent in 2021. In contrast, the share of the poorest 20 percent dropped from 5.9 percent to 3.3 percent in the same period.

Rise in Number of Poor Households in Cities

While 90 percent of the poorest 20 percent in 2016 lived in rural India, the figure dropped to 70 percent in 2021. In urban areas as well, the share of the poorest 20 percent households went from 10 percent in 2016 to 30 percent in 2021.

"The data reflects that casual labourers, petty traders, household workers, among others, in Tier 1 and Tier 2 cities got hit the most by the pandemic. During the survey, we also noticed that while in rural areas, people in the lower middle income category (Q2) moved to the middle income category (Q3), in the urban areas, the shift has been downwards, from Q3 to Q2. In fact, the rise in poverty level of the urban poor has pulled down the household income of the entire category," reported The Indian Express, quoting Rajesh Shukla, MD and CEO of PRICE.

Most Middle-Class Breadwinners Are Illiterate or Have Primary Schooling

The survey further shows that while a majority of the breadwinners in 'Rich India' (top 20 percent) have completed high-school education (60 percent, of which 40 percent are graduates and above), nearly half of 'Middle India' (60 percent) only have primary education.

As for the bottom 20 percent, 86 percent are either illiterate or just have primary education. Only 6 percent are graduates and above.

(With inputs from The Indian Express, ICE360 2021 Survey.)