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Since the 2000s, India has made remarkable progress in reducing absolute poverty. Between 2011 and 2015, more than 90 million people were lifted out of extreme poverty. However, the COVID-19 pandemic has reversed the course of poverty reduction, at least temporarily. The economic slowdown triggered by the outbreak is believed to have had a significant impact on poor and vulnerable households.
After March 25, 2020, when a national lockdown was implemented, economic activity slowed sharply. As a result, output fell by a whopping 25 percent (year on year) between April and June, the first quarter of the FY21 fiscal year. The informal sector, where the vast majority of India’s labor force is employed, has been particularly affected. As in most countries, the pandemic has exacerbated vulnerabilities for traditionally excluded groups, such as youth, women, and migrants. Real GDP is estimated to have contracted by 8.5 percent in FY21 overall, but it has become positive again in the second half of the year. As growth resumes, poverty reduction is expected to return to its pre-pandemic trajectory.
The response of the Government to the COVID-19 outbreak has been swift and comprehensive. A national lockdown to contain the health emergency was complemented by a comprehensive policy package to mitigate the impact on the poorest households (through various social protection measures) as well as on small and medium enterprises (through enhanced liquidity and financial support).
Source: World Bank, India Country Overview
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