Tens of millions plunge into poverty in Covid-ravaged India

Bloomberg

After dipping into his savings to weather India’s snap pandemic lockdown last March, Manoj Kumar was just getting his head above water again earning 600 rupees ($8) a day as a construction worker in the tourist hotspot of Goa.
He’d squirreled away enough for a trip last month to his native village in Bihar some 1,490 miles away for a wedding. He’s still there, stuck in one of the nation’s least developed states, as a fierce second Covid-19 wave triggers the world’s worst health crisis and prevents his return. On a lucky day, he’ll land some odd jobs that fetch him as much as 300 rupees. But there aren’t too many of those chores left. So he’s taking loans to feed and clothe his wife and three kids.
“It is all in God’s hands now,” said Kumar, who’s told his wife to curtail spending on items such as lentils, cooking oil and clothes. “I don’t know when I will return. My family is worried and doesn’t want me to go back as the cases are also rising in Goa.”
Kumar, 40, is one of the millions of migrant workers who form part of India’s vast unreported informal sector, which accounts for half of its $2.9 trillion, domestic demand-driven economy. A protracted Covid wave is shrinking incomes and wiping out savings of people like Kumar, posing the risk of a double whammy for Asia’s third-largest economy that’s still struggling to recover from last year’s pandemic-induced recession.
The government estimates India’s gross domestic product shrank 8% in the year ended in March, its biggest contraction since 1952. Many economists are cutting their forecasts for the current fiscal year as rising unemployment and dwindling savings dim the chances of a double-digit growth. Shaun Roache, chief economist for Asia Pacific at S&P Global Ratings, slashed his prediction to 9.8% from 11% earlier. Fitch Solutions sees the economy expanding by 9.5%, a projection that’s below the Bloomberg consensus of around 11%.
“A drawn-out Covid-19 outbreak will impede India’s
economic recovery,” Singapore-based Roache said. “The country already faces a permanent loss of output versus its pre-pandemic path, suggesting a long-term production deficit equivalent to about 10% of GDP.” With the latest surge caused by a new coronavirus strain, total infections in India have risen to 21.89 million, a third of which were added just in the past three weeks alone. Daily death count hit a record at 4,187 on Saturday.