While India’s robust growth over the past decade likely contributed to such a reduction,the authorities have also expanded social assistance programs, most notably through the 2013National Food Security Act, whereby the government provided enhanced rations of food to the bottom 50 and 75 percent of the urban and rural populations, respectively.

Broader measures of poverty likely declined as well, reflecting the government’s development interventions in health and education—for example, a saturation of village electrification and toilets, which was achieved in2018.

Similarly, the Multidimensional Poverty Indicator (MPI) shows a large reduction in poverty in India, where about 275 million people moved out of multidimensional poverty between 2005-06 and2015-16 and about 140 million people between 2015-16 and 2019-21.

Notwithstanding this considerable improvement in poverty, the large impact of the pandemic shock on economic activity has raised concerns about poverty and inequality, the report emphasized. According to the nowcasting analysis by the World Bank (2022), the global poverty rate increased by 11 percent or 70 million people, and the global Gini coefficient increased by over 0.5 points in 2020. As with other countries, India's economy was adversely affected by the pandemic and the associated containmen tmeasures. GDP and consumption per capita declined sharply during the first and second waves of the pandemic. Following the first wave, the employment to population ratio decreased by 7.3 percentage points, and unemployment rate spiked to above 20 percent in urban areas. Although both GDP and labor market indicators recovered quickly, the distributional impact of the pandemic could be significant given the heterogenous shocks of the pandemic.

Though the paper used unit-level data from two nationally representative surveys for analysis of the three specific issues – to investigate the evolution of poverty and inequality in India during COVID; the factors that are associated with the impact of the pandemic on income and consumption; and the impact of the government’s food subsidy scheme – it has cast serious doubts about the quality data and therefore readjusted them to match the present ground reality as far as the authors of the study could see.

The two data set the study uses are – the Consumer Pyramids Household Survey (CPHS) collected by a private agency called the Centre for Monitoring the Indian Economy (CMIE) and the Periodic Labour Force Survey (PLFS) conducted by the Ministry of Statistics and Programme Implementation.

It is already known that the present ruling establishment has been repeatedly warning against the private data, but they themselves are not providing realtime data. Perhaps it is in this context the study has taken note of the ‘concerns’, of course without saying anything about the government about the private data regarding CPHS’s representativeness. “We adjusted the sampling weights of CPHS,” the paper says, while mentioning that the definition of consumption and income as captured by the CPHS do not necessarily match the relevant variables in India’s official household survey.

It is therefore, the paper says, out main emphasis is on capturing the changes and drivers of poverty and inequality during the pandemic, as opposed to estimates of the level of poverty and inequality consistent with official measures or surveys, ie, the last official survey from 2011-12. The paper also developed their analysis of labour income dynamics through the government PLFS data.

The IMF paper has concluded, first, that the economic downturn associated with the COVID-19 pandemic have increased poverty and inequality, but the impact has been temporary with both poverty and inequality returning to their pre-pandemic levels by the end of 2021.

Secondly, demographic and labour market characteristics were the key factors associated with poverty, income, and consumption changes. The analysis broadly suggests that low skill (low education) workers and those working in informal sector with no formal employment protection were more negatively impacted during the pandemic.

Lastly, the government’s expansion of food subsidies has likely provided significant mitigation to the rise in poverty during the pandemic. Going forward, ongoing improvements in targeting and portability are critical to improve outcomes with limited fiscal space. It means, all will depend on the level of performance of the government in reduction of poverty and inequality, that have been suggested by several other studies as rising in the last decade.

However, the present IMF paper does not say it, but casts only doubts. While analyzing the impact of social assistance schemes on poverty and inequality, it says that there was large leakage in such programmes and only a part of subsidy reaches the intended recipients. “Prior to the Food Security Act 2013 data showed that leakage has improved to about 45%. As we do not have any data to estimate the recent leakage, we consider two scenarios. For, scenario 1, leakage is assumed to decline from about 45 per cent in 2015 to 14 per cent in early 2020, as in Bhalla et al. (2022). For scenario 2, we use a more conservative assumption where leakage declines by 0.2% each month and reaches about 30% at the end of 2021,” the paper says.

In both cases, what is significant is, IMF does not rule out leakage of subsidies, such as food subsidies to poor households that are reaching to the persons for which these are not intended. We have examples, of large food subsidy diversion to industrial houses for ethanol production who are being supplied rice at subsidized rate of Rs20 per kg while poor people of Karnataka were refused rice from FCI even at the market rate of Rs34 per kg. There can be many other examples that perhaps did not reach the researchers of the present IMF study. (IPA Service)