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Impact of pandemic induced poverty and mitigating measures

  • Category
    Economy
  • Published
    21st Dec, 2021

Context

WHO recently stated that around half a billion people were pushed into extreme poverty because they had to pay for rising healthcare costs. Poverty has always been one of the biggest challenges and so, there is a need to study the impact of pandemic and adopt measures to mitigate them.

Background

COVID-19 pandemic and its spread

  • The disease was declared as a pandemic by WHO in Mar’20 which led to several restrictions on physical movements of people by the countries and also rise in healthcare spending by the states to control the pandemic.
  • It had impacted and is still impacting economic and social wellbeing of people and thus, has given rise to pandemic induced poverty.

Analysis

What is poverty?

  • According to World Health Organisation (WHO), the proportion of the population living below the international poverty line is the percentage living on less than US$ 1.90 a day at 2011 international prices.
  • This poverty line has fixed purchasing power across countries or areas; hence, it is often called the "international poverty line".

Status of poverty before the pandemic-

  • According to the World Bank, “Even before the COVID-19 pandemic struck, almost 1 billion people were spending more than 10 per cent of their household budget on health”.
  • While India has managed to cut poverty sharply from 2011 to 2019 and lifted many people out of poverty line, the recent pandemic could reverse the progresses made.

Impact of pandemic on poverty-

  • Economic reasons-
    • Loss in employment opportunities and decrease in income has exacerbated crisis for poorest population. According to a report, the middle class in India may have shrunk by 30% in the year 2020 itself.
    • The COVID-19 pandemic pushed a lot of people out of work. CMIE data showed that a whopping 113.6 million people lost their jobs between March and April 2020 in India. The unemployment rate had also peaked to its highest in over four decades.
    • Sectoral differences-
      • While some industries in Service sector have switched to ‘work from home’, many were not able to do so like tourism. The impact has been more on blue collar worker workers than white collar workers.
      • Similarly manufacturing industries were impacted more mainly MSMEs, due to lockdown restrictions, and reverse migration of workers.
    • Health spending-
      • Less insurance penetration- High ‘out of pocket expenditure’ on health services due to limited insurance penetration and less state intervention is also a cause of concern. In India, OOP is around 67% which is very high vis-à-vis developed counterparts.
      • Class variation-
        • Differential impact on lower and middle class to absorb pandemic induced shock has given further impetus on poverty.
        • The proportion of income spent on health is higher for lower class as compared to middle and upper class thus further increasing inequality.
      • Social variations-
        • Women were affected more due to layoffs by companies and reduced health spending by families which could further increase gender gap in the long run.
      • Accessibility gap-
        • A gap in access to affordable healthcare across countries and regions has further created variation in proportion of income spent on healthcare. When combined with economic inequality, it has made the situation more worrisome for the poor people.
      • Reduced state spending-
        • According to WHO, the pandemic made it difficult for countries to run other services such as the general immunisation programmes and treatment of other communicable diseases. For example, at global level, immunization coverage dropped for the first time in ten years, and deaths from tuberculosis and malaria increased

In the short term, people can adopt some coping mechanisms like selling of assets, or getting assistance from governments and relatives. But in the longer run, pandemic induced poverty can lead to malnutrition, susceptibility to disease and missed schooling.COVID-19 will accentuate the long-term concentration of poverty in countries that are middle-income, fragile and conflict-affected, and located in Africa.

Steps taken to reduce pandemic induced poverty-

Various steps have been taken by governments to mitigate the negative effects of pandemic on the poverty levels. Some of the steps taken are-

  • Steps taken for industries-
    • Financial incentives for industries to prevent layoffs and increase their revenues.
    • Releasing ‘Emergency Credit Line Guarantee Scheme’ for severely hit sectors like tourism and aviation.
  • Steps taken for Individuals-
    • Rolling out ‘One nation one ration card’ scheme for migrants to access PDS facility across the nation.
    • Direct cash transfers under various schemes to eligible people to aid in reducing poverty.
  • Steps related to COVID-19 pandemic-
    • Free vaccination to all adults in all government hospitals.
    • Creation of PM CARES Fund for everyone to assist state efforts in mitigating COVID induced challenges.
    • Focus on prevention from COVID-19 by increasing awareness and health literacy.
    • Promoting indigenous research on COVID related vaccines and early detection.

Suggestive measures-

However, many more steps can be undertaken to ensure health does not suffer and poverty levels could be reduced. Some suggestions include-

  • According to WHO, all governments should immediately resume and accelerate efforts to ensure health coverage for each citizen. It also urged countries to “improve the collection, timeliness and disaggregation of data on access, service coverage, out-of-pocket health spending and total expenditure”
  • Further, increasing insurance penetration and direct cash transfers are required to reduce impact on poor people.
  • Investing in digital services and enable real time monitoring of beneficiaries to achieve universal immunisation at a faster pace. For India, Unique Aadhar ID and National health portal can be a game changer in this direction.
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