Poverty in India in the face of Covid‐19: Diagnosis and prospects*

• Published date: 01 November 2021
• Author: Hai‐Anh Dang,Peter Lanjouw,Elise Vrijburg
• Date: 01 November 2021
• DOI: http://doi.org/10.1111/rode.12833

1816 

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       Rev Dev Econ. 2021;25:1816–1837.

wileyonlinelibrary.com/journal/rode

Received: 28 May 2021 

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  Revised: 2 September 2021 

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  Accepted: 3 September 2021

DOI: 10.1111/rode.12833  

SPECIAL ISSUE ARTICLE

Poverty in India in the face of Covid- 19:

Diagnosis and prospects*

Hai- AnhDang1

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PeterLanjouw2

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EliseVrijburg2

*This paper is part of the Oxford Policy Management DEEP project undertaken on behalf of the Foreign 

Commonwealth and Development Office of the UK. We are grateful to two reviewers for comments as well to Finn 

Tarp, guest editor of this symposium issue, for guidance. We are also grateful to Jehovannes Aikaeli, Ines Afonso Roque 

Ferreira, Chris Elbers, David Garcés- Urzainqui, John Hoddinott, Kenneth Mdadila, Tseday Mekasha, Gerton Rongen, 

and Vincenzo Salvucci for helpful discussions. All errors are our own. 

1Development Data Group, the World 

Bank, Washington, District of Columbia, 

USA

2Department of Economics, Vrije 

Universiteit, Amsterdam, the 

Netherlands

Correspondence

Peter Lanjouw, Department of 

Economics, School of Business 

and Economics, Vrije Universiteit 

Amsterdam, De Boelelaan 1085, 1081 HV 

Amsterdam, the Netherlands.

Email: p.f.lanjouw@vu.nl

Funding information

Oxford Policy Management

Abstract

India has  been hard- hit by  the Covid- 19 pandemic.  The 

virus has  exacted  a heavy  toll  in terms  of  lives  lost and 

deteriorating  health  outcomes.  The  economic  conse-

quences  of  the  pandemic  have  been  similarly  grim.  In 

this paper  we  attempt an  initial, interim, assessment  of 

the impacts of the crisis on poverty. We review the grow-

ing literature  that  considers  emerging  poverty  impacts, 

noting that there remain significant knowledge gaps due 

to limited evidence on current welfare outcomes. We an-

alyze pre- Covid survey data to  examine the incidence of 

chronic poverty and downward mobility during a period 

of rapid economic  growth and declining  poverty. A pro-

file of poverty during such  a period might offer a  plausi-

ble,  partial,  window  on  population  groups  currently  at 

risk. We suggest  that, notwithstanding  the severe initial 

impacts of the crisis on poverty, there are grounds for ex-

pecting further consequences going forward. As the virus 

has spread out of the relatively affluent cities, and as eco-

nomic stagnation  persists,  rural  areas,  with  historically 

higher  rates  of  chronic  poverty  and  vulnerability,  may 

This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits 

use and distribution in any medium, provided the original work is properly cited, the use is non- commercial and no modifications or 

adaptations are made.

© 2021 The Authors. Review of Development Economics published by John Wiley & Sons Ltd

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INTRODUCTION

The year 2020  marks a major  break in the  progress achieved throughout  the world in  reducing 

global poverty. Sustainable  Development Goal  1, announced  by the  international development 

community in 2015, had proclaimed the ambitious objective of ending extreme global poverty by 

2030. Success in meeting the Millennium Development Goal of halving global poverty during the 

1990– 2015 interval had undoubtedly emboldened the architects of the Sustainable Development 

Goals to pursue a poverty objective that, while clearly  aspirational, did not appear to be entirely 

beyond reach. The onset of the Covid- 19 pandemic in early 2020 has dampened these ambitions. 

Nowhere is this more evident than in India,  a country where  poverty reduction during the  first 

decades of the 2000s had been remarkable, but where the impact of the Covid pandemic has been 

staggering in terms of both public health and economic livelihoods.

Given that the  Covid- 19 pandemic remains in  full swing,  it is impossible  to arrive at  a com-

plete assessment of its full impact on poverty in India and how it may evolve going forward. The 

economic consequences of the crisis are still working their way through the Indian economy, and 

policy measures aimed at addressing both the public health and economic fallout from the crisis 

continue to be formulated  and rolled out.  Empirical evidence on  the actual impact  of the  crisis 

also remains highly fragmented and incomplete.

Yet, to preserve as much as possible of the  progress that India undeniably achieved in recent 

decades, policies that mitigate the most severe consequences of the crisis must be introduced. To 

this end, there is  a need to  anticipate the likely consequences  of the  crisis for poverty. Not only 

is it necessary to track how poverty is evolving in the face of the crisis, but it is important to also 

identify and  understand  the circumstances  of  those  who face  a  heightened risk  of  falling  into 

poverty as the crisis continues to unfold.

In this study we attempt to provide an assessment of how the fight to end extreme poverty in 

India has been disrupted by  the arrival of  the Covid- 19 crisis. In particular, we are interested in 

informing policy- making by providing insights into possible population groups that are likely to 

have been most seriously affected by the crisis, or to be particularly exposed to its most pernicious 

consequences in the months and years to come.

We start  in  the  next  section  with  a  brief  review  of   progress  in  poverty  reduction  prior  to 

the onset  of  the  Covid- 19 crisis. We  are severely  handicapped in  this  regard in  that  nationally 

see particularly sharp increases in  poverty. While recent 

vaccination  developments  offer  some  grounds  for  opti-

mism, there  remains  an urgent  need  to identify,  imple-

ment and amplify effective policy alleviation measures.

KEYWORDS

Covid- 19, India, poverty, poverty dynamics, synthetic panels, 

vulnerability

JEL CLASSIFICATION

I32; C53