In a recent report, economists at SBI Research have challenged the notion of a K-shaped recovery in India, where the rich get richer and the poor get poorer due to the COVID-19 pandemic. They argue that the pandemic has been a “leveler” that has reduced inequality by providing food and income support to the poor.
According to the report, India has achieved a sharp recovery after the pandemic, despite some critics claiming otherwise. The report cites data and studies that show how cereal procurement by the government has helped reduce inequality by benefiting the poorest of the poor through free distribution of foodgrains, and by putting money in the hands of smaller and marginal farmers.
The report also claims that government transfers to the poor alone amount to Rs 75,000 per household per annum, which is a significant boost to their income. The report further states that with a progressive growth in output across states, as measured by GSDP, the benefits of growth have been inclusive and have reached all segments of the population.
The report concludes that “in hindsight, the pandemic may have been a leveller in terms of inequality with the poor getting protected through measures such as food transfers.” It also dismisses the idea that inequality has worsened during the pandemic, saying that such fluctuations are transient and linked to short-run asset price movements.