ICE360 Survey 2021: PRICE

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• Recently, a survey named ICE360 Survey 2021 was conducted by People’s Research on India’s Consumer Economy (PRICE).

Key Findings

• Income: 
  • Income of the poorest fifth has plunged 53% in 5 yrs while those at top have surged.
  • In a trend unprecedented since economic liberalisation, the annual income of the poorest 20% of Indian households, constantly rising since 1995, plunged 53% in the pandemic year 2020-21 from their levels in 2015-16. 
  • Growth for Richest: In the same five-year period, the richest 20% saw their annual household income grow 39% reflecting the sharp contrast Covid’s economic impact has had on the bottom of the pyramid and the top.
• K-shaped Recovery: This recovery is highlighted to be K-shaped.
• Pandemic effect: While the pandemic brought economic activity to a standstill for at least two quarters in 2020-21 and resulted in a 7.3% contraction in GDP in 2020-21, the survey shows that the pandemic hit the urban poor most and eroded their household income.
• Variation within Population: The poorest 20% (first quintile) witnessed the biggest erosion of 53%. 
  • The second lowest quintile (lower middle category), too, witnessed a decline in their household income of 32% in the same period. 
  • The quantum of erosion reduced to 9% for those in the middle income category, 
  • The top two quintiles — upper middle (20%) saw their household income rise by 7%.
  • The richest (20%) saw their household income rise by 39%.

• Rural-Urban Split:
  • Even among the poorest 20 percent, those in urban areas got more impacted than their rural counterparts as the first wave of Covid and the lockdown led to stringent curbs on economic activity in urban areas. 
  • This resulted in job losses and loss of income for the casual labour, petty traders and household workers.

Image Courtesy: IE

• Rising Poor Population:
  • There has been a rise in the share of poor in cities. 
  • While 90 per cent of the poorest 20 per cent in 2016, lived in rural India, that number had dropped to 70 per cent in 2021. 
  • On the other hand, the share of poorest 20 per cent in urban areas has gone up from around 10 per cent to 30 per cent now.

Way Ahead

• Improving ease of doing business should make the tide rise again and sweep small business and individuals up along with it. 
• There is a need to inspire confidence through long-term policy stability.
• Most big companies are doing well and don’t need more help but the need is to work the economy for the bottom half.

Source: IE