The Impact of the Pandemic on Social Vulnerabilities in India

Abstract

This research looks at the economic well-being of households across social categories in India before and during the COVID-19 pandemic. Nearly all households saw significant spending reductions during the pandemic, resulting in a leftward shift in the distribution of monthly per capita household expenditure (MPCHE) in 2020 compared to that in 2017. We document that even prior to the epidemic, the percentage change in the MPCHE slowed down, leaving the Indian economy more vulnerable. This slowdown was more pronounced particularly among urban families, who had seen a drop in spending prior to the pandemic. The economic shock that came in the wake of the COVID-19 pandemic further compounded this problem. Indeed in 2020, the MPCHE fell by 27% in urban households and 20% in rural households, while poverty rose by 19 and 14 percentage points in urban and rural households, respectively. In this paper, we focus on the urban households, which were disproportionately impacted by the pandemic, and evaluate the impact by two social groups—caste and religion. Our findings show that the socially disadvantaged groups, who were already at the bottom of the economic ladder in the pre-pandemic period, have been significantly impacted. SC/STs, Muslims, and Hindu-SC/STs had the highest increase in poverty rates as compared to Hindu-UCs, Sikhs, and Christians. Our results indicate that the pandemic has deepened already-existing economic disparities between socio-economic groups.