Tuesday, October 20, 2020

What if the middle class disappears?

 Pratik Parija wrote about a woman called Nafisa who, along with her husband, "struggled to make even 1 rupee a day from their tailoring business after India went into a Covid-19 lockdown in March". Her 4-month old child died of starvation because she could not produce enough breast milk. "It is an especially cruel tragedy because it happened in a country which boasts about having the world's largest food aid program. Government warehouses brim with more than 70 million metric tons of grain, or almost 15% of global stockpiles, and the nation's wheat and rice harvests have surged to records." "State-owned FCI and state procurement agencies have bought 98.19 lakh (9.819 million) tonnes of paddy till Monday for Rs 18,540 crore (Rs 185.40 billion)." A telephone survey by the National Council of Applied Economic Research (NCAER) showed that employment of men was affected more than that of women, those who were self-employed suffered less, urban areas suffered more than rural areas and "individuals at the bottom of the income pyramid have been affected by job losses far more than the individuals at the top of the income pyramid and this difference is striking in cities", wrote Desai, Deshmukh and Pramanik. "India ranked 94 among 107 countries in the Global Hunger Index (GHI) 2020 and continues to be in the 'serious hunger' category, though it has made some progress, particularly since the enactment of National Food Security Act." However, this hunger cannot blamed entirely on coronavirus induced lockdown. "After a collapse in rural incomes and a de-growth in casual wages -- heightened by the ban on high value currency notes in end 2016 -- a recent National Statistical Office (NSO) survey report leaked by Business Standard showed a significant 9% drop in rural consumption, including on staples, between 2011-12 and 2017-18," wrote Sayantan Bera in December 2019. "The last time a fall in consumption was recorded was half a century ago in the early 1970s." The Indian Human Development Survey of 42,556 households found "22% poverty rate in households with children and 8% poverty rate in households without children", wrote Sana Ali. "Among the urban middle classes, it is no longer unusual to find families stopping at one child, even when this child is a girl," wrote Profs Basu and Desai in a paper in July 2012. India needs to grow the middle-class if it is to become a rich nation. "Consumption, the pillar that normally accounts for over 60% of India's GDP, is majorly reliant on spending by middle class consumers, both urban and rural." Every government in India has seen middle class taxpayers as cash cows to be squeezed into oblivion. With vanishing fertility the middle class may disappear leaving only the poor. Hunger can only grow.  

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