COVID19, Consumption and Inequality: A Systematic Analysis of Rural Population of India

BackgroundCOVID19 pandemic has had major impact on consumption levels and inequality within India. Government policy interventions have targeted poor households for cash and food transfers. It is important, however, to study the impact of the pandemic on consumption levels of non-poor in India, and in particular the middle class. In this paper, we aim to quantify the changes in consumption levels and inequality over time, across all groups of rural households in India. MethodsWe analyze three rounds of COVID 19-related shock surveys between May and September 2020. These surveys cover rural households of six large states in India and are representative of more than 442 million (52% of Indias rural population). FindingsIn the early phase of the pandemic, it was the bottom 40% of households that experienced the most severe decline in consumption. But as the pandemic deepened, consumption declined across all classes of households. Besides the poorest, it was particularly severe for the middle class (defined as 40%-80%). We also measure consumption inequality over time and find that the Gini coefficient of consumption distribution increased significantly. InterpretationIn addition to focusing on poor households, policy responses to alleviate peoples sufferings would have to consider a more comprehensive boost to consumption and compensate for the reduced consumption among middle class families as well. FundingNone.