In the months following the outbreak of the COVID-19 pandemic, there was concern about deepening inequality in India, with some calling it a ‘K-shaped’ recovery where the rich getting richer while the poor go downhill.
Based on data and research, SBI economists said, “…in hindsight, the pandemic may have leveled off. Inequality with the poor being protected through measures such as food transfers.”
It said India had recovered strongly from the pandemic and acknowledged that critics still see it as a K-shaped recovery for India.
“… It is true that a strong increase in financial assets leads to increased inequality in 2021. However, when correlated with short-term asset price movements, fluctuations in inequality Such equality is always temporary,” the report said.
“…In the context of India, it would be a false conjecture to assume that inequality has worsened during the pandemic,” it added, citing its research on how Grain procurement has helped reduce inequality.
The report says more shopping is benefiting the poorest of the poor in terms of free food distribution afterwards, while helping to get money into the hands of smaller and marginal farmers , with distributive effects. “With the progressive growth in interstate output represented by GSDPit is clear that the fruits of that growth have clearly reverberated and matched the inclusive growth.
“As a result, India has done quite well during the pandemic in terms of weathering income shocks across population groups,” the study said.