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28th March 2022 (6 Topics)

Poverty rose but income inequality fell

Poverty certainly rose during the COVID-19 pandemic. After examining the monthly data from Consumer Pyramids Household Survey 2021, it was found that extreme poverty rose from 7.6% in November 2019 to 11.7% in July 2021. However, income inequality actually fell. 

Impact of Covid on Income inequality

  • Comparison- The average monthly income of the top quartile in urban areas fell almost 30%, to ?32,500 by July 2021 against ?45,000 in 2019, the monthly income of the bottom quartile in July 2021 remained at pre-pandemic levels i.e ?8000.
  • Impact-The result is that inequality, measured as the percentage change in the income of the top quartile minus the income in the bottom quartile, fell by 15-20 percentage points.
  • Finding-This is a robust finding: richer households saw larger drops in income all along the income scale, in rural and urban areas, within each State, and even within caste groups.
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