The report was published in the latest round of ICE360 Survey 2021, which was conducted by the Mumbai-based think-tank People’s Research on India’s Consumer Economy (PRICE).
The income of the poorest fifth which constitutes 20% of the Indian households has plunged 53% in 2020-2021, during the Covid-19 pandemic as compared to their income in 2015-2016, whereas the annual income of the top richest 20% of households has surged 39% in the same period, the Indian Express reported citing a report.
The report was published in the latest round of ICE360 Survey 2021, which was conducted by the Mumbai-based think-tank People’s Research on India’s Consumer Economy (PRICE). The survey, which covered 2,00,000 households in the first round and 42,000 households in the second round, was conducted between April and October last year, in over 120 towns and 800 villages across 100 districts.
According to the survey, apart from the poorest 20% (first quintile), which witnessed the biggest erosion in income by 53%, the second-lowest quintile (lower middle class), saw their income decline by 32% in the same period. Meanwhile, for the middle-class category, the erosion in their income was only by 9%, whereas the upper-middle class and the richest saw their income surge by 7% and 39% respectively.
The survey also pointed out that in the past one year, the richest household added more income per household and pooled more income as a group in the last five years, compared to the pre-liberalisation period. Similarly, the poorest 20% households have witnessed a decline in their income since 1995. Moreover, the income share of the richest 20%, increased from 50.2% in 1995 to 56.3% in 2021. The income share of the poorest 20% declined from 5.9% to 3.3% during the same period.
Notably, between 2005 and 2016, while the richest 20% of households saw an increase in their income by 34%, the poorest 20% saw a surge of 183% in their household income at an average annual growth rate of 9.9%.
In terms of income growth in rural and urban areas, the poorest 20% in the urban area got more impacted during the two years of the Covid-19 pandemic. The job loss, halting of economic activity and loss of income in the labour sector and Small and Medium Enterprises added to the woes of the poorest 20% in urban cities. Also, compared to 2016, the number of poorest 20% living in urban cities has gone up from 10% to 30%. The poorest 20% in rural areas have witnessed a sharp downfall in this regard. The number has dropped from 90% in 2016 to 70% in 2021.