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Covid-19: Only for the poor

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Fahid Fayaz Darangay

Antonio Guterres, UN Secretary General rightly said, ‘COVID-19 has been likened to an x-ray, revealing fractures in the fragile skeleton of the societies we have built. It is exposing fallacies and falsehoods everywhere: The lie that free markets can deliver healthcare for all; The fiction that unpaid care work is not work; The delusion that we live in a post-racist world; The myth that we are all in the same boat. While we are all floating on the same sea, it’s clear that some are in super yachts, while others are clinging to the drifting debris.’
The International Monetary Fund (IMF), the World Bank and the Organisation for Economic Cooperation and Development (OECD) have all expressed deep concern that the pandemic will drive up inequality all over the world, with deeply harmful effects. ’The impact will be profound [1) with increased inequality leading to economic and social upheaval: a lost generation in the 2020s whose after-effects will be felt for decades to come’. – Kristalina Georgieva, Managing Director of the IMF.
2. This view is supported by Oxfam’s survey of 295 economists from 79 countries.3 They included leading global economists such as Jayati Ghosh, Jeffrey Sachs and Gabriel Zucman. 87% of respondents expected that income inequality in their country was either going to increase or strongly increase as a result of the pandemic. This included economists from 77 of the 79 countries. Over half of all respondents also thought gender inequality would likely or very likely increase, and more than two-thirds thought so of racial inequality. Two thirds also felt that their government did not have a plan in place to combat inequality.
Some alarming highlights internationally:
• It took just nine months for the top 1,000 billionaires’ fortunes to return to their pre-pandemic highs but for the world’s poorest people recovery could take 14 times longer, more than a decade.
• The increase in the 10 richest billionaires’ wealth since the crisis began is more than enough to prevent anyone on Earth from falling into poverty because of the virus, and to pay for a COVID-19 vaccine for everyone.
• Globally, women are overrepresented in the sectors of the economy that are hardest hit by the pandemic.
• If women were represented at the same rate as men in those sectors, 112 million women would no longer be at high risk of losing their incomes or jobs.
• In Brazil, people of Afro-descent have been 40% more likely to die of COVID-19 than White people.
• If their death rate had been the same as White Brazilians’, then as of June 2020, over 9,200 Afrodescendants would have still been alive.
• In the US, Latinx and Black people are more likely to die of COVID-19 than White people.
• If their death rate had been the same as White people ’s, then as of December 2020, close to 22,000 Latinx and Black people would have still been alive.
• The World Bank has calculated that if countries act now to reduce inequality then poverty could return to pre-crisis levels in just three years, rather than in over a decade.
Some statistics:
• In the first months of the pandemic, a stock market collapse saw billionaires, who are some of the biggest stockholders, experience dramatic reductions in their wealth. Yet this setback was short-lived. Within nine months, the top 1,000 billionaires, mainly white men,25 had recovered all the wealth they had lost.
• With unprecedented support from governments for their economies, the stock market has been booming, driving up billionaire wealth, even while the real economy faces the deepest recession in a century.
• In contrast, after the financial crisis in 2008, it took five years for billionaire wealth to return to its pre-crisis highs.
• Worldwide, billionaires’ wealth increased by a staggering $3.9tn (trillion) between 18 March and 31 December 2020.
• Their total wealth now stands at $11.95tn, which is equivalent to what G20 governments have spent in response to the pandemic.
• The world’s 10 richest billionaires have collectively seen their wealth increase by $540bn over this period. Worldwide sales of private jets soared when commercial travel was banned.
• While Lebanon faces economic implosion, its super-rich are finding solace in mountain resorts.33 In country after country it is the richest who are least affected by the pandemic, and are the quickest to see their fortunes recover.
• They also remain the greatest emitters of carbon, and the greatest drivers of climate breakdown.
• At the same time, the greatest economic shock since the Great Depression began to bite and the pandemic saw hundreds of millions of people lose their jobs and face destitution and hunger. This shock is set to reverse the decline in global poverty we have witnessed over the past two decades. It is estimated that the total number of people living in poverty could have increased by between 200 million and 500 million in 2020.
• The number of people living in poverty might not return even to its pre-crisis level for over a decade. The pandemic has exposed the fact that most people on Earth live just one pay check away from penury. They live on between $2 and $10 a day.They rent a couple of rooms for their family in a slum. Before the crisis hit they were just managing to get by, and starting to imagine a better future for their children. They are the taxi drivers, the hairdressers, the market traders. They are the security guards, the cleaners, the cooks. They are the factory workers, the farmers. The coronavirus crisis has shown us that for most of humanity there has never been a permanent exit from poverty and insecurity. Instead, at best, there has been a temporary and deeply vulnerable reprieve.
• In September 2020, Jeff Bezos could have paid all 876,000 Amazon employees a $105,000 bonus and still be as wealthy as he was before the pandemic.
About India: Indian billionaires increased their wealth by 35% during the lockdown to ₹ 3 trillion, ranking India after U.S., China, Germany, Russia and France. Out of these, the rise in fortunes for the top 100 billionaires since the lockdown in March is enough to give every one of the 138 million poorest Indian people a cheque for ₹94,045 each, according to Oxfam’s ‘Inequality Virus Report’ released on the opening day of the World Economic Forum in Davos.
The wealth of just the top 11 billionaires during the pandemic could easily sustain the MGNREGS or the Health Ministry for the next 10 years, stated the report, which underscored the deepening inequalities due to COVID-19 where the wealthiest escaped the worst impact of the pandemic while the poor faced joblessness, starvation and death.
Mukesh Ambani, who emerged as the richest man in India and Asia, earned ₹90 crore an hour during the pandemic when around 24% of the people in the country were earning under ₹ 3,000 a month during the lockdown. The increase in his wealth alone could keep 40 crore informal workers out of poverty for at least five months, said the report.
It recommended reintroducing the wealth tax and effecting a one-time COVID-19 cess of 4% on taxable income of over ₹10 lakh to help the economy recover from the lockdown. According to its estimate, wealth tax on the nation’s 954 richest families could raise the equivalent of 1% of the GDP.
The report also delved deeper into different forms of inequities, including educational, gender and health, which meant that facilities to wash hands and maintain distance, essential to prevent the spread of Coronavirus, was impossible for a majority of the population.
Health
According to the report, only 6% of the poorest 20% have access to non-shared sources of improved sanitation, compared to 93.4 % of the top 20 %. 59.6 % of India’s population lived in a room or less, which meant that protocols necessary to prevent the spread of COVID-19 cannot be followed. While the government took steps to make COVID-19 services affordable by including them under Ayushman Bharat-PMJAY, the scheme only covered BPL (below poverty line) population leaving out the uninsured poor and the middle class.
Education
Till October, 32 crores students were hit by closure of schools, of whom 84 % resided in rural areas and 70 %attended government schools.
Oxfam India’s survey across five States said that close to 40 % of teachers in government schools feared that the prolonged school closure might lead to a third of the students not returning once schools reopened. It was estimated that out of school rates would double in a year. Dalits, Adivasis and Muslims were likely to see a higher rate of dropout. Girls were also most vulnerable as they were at risk of early and forced marriage, violence and early pregnancies, it noted.
Gender
Unemployment of women rose by 15% from a pre-lockdown level of 18 %, which could result in a loss of India’s GDP of about 8 % or ₹15 trillion. Women who were employed before the lockdown were also 23.5 percentage points less likely to be re-employed compared to men in the post lockdown phase. (This was reported by The Hindu).
(The author is currently pursuing his Masters in Financial Economics from Madras School of Economics, Chennai)

 

 


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