As policymakers navigate the tumultuous global macroeconomic environment, they must be mindful of the highly uneven nature of the recovery, and take measures to address the distress of the most vulnerable.

After contracting in 2020-21, the Indian economy rebounded sharply in 2021-22, ending the year 1.5 per cent above its pre-pandemic level. This year the Reserve Bank of India expects it to grow at 7.2 per cent, making India one of the fastest growing economies in the world during this period. But the recovery from the pandemic lows has been anything but even. Beyond the headline numbers, there are indicators of the unabated pain stemming from the pandemic and the continuing distress in parts of the economy.

One possible indication of the scale of the distress comes from data on households/individuals who have worked under MGNREGA. In 2019-20, the year prior to the pandemic, 7.88 crore individuals worked under the scheme. In 2020-21, the first year of the pandemic, this number rose to 11.19 crore. While in the subsequent year it dipped to 10.62 crore, the number of individuals working under the scheme remained considerably higher than in the pre-pandemic period. In fact, so far this year, 6.29 crore individuals have already worked under the scheme as compared to 6.21 crore in the entire year of 2014-15. This growing reliance on MGNREGA likely indicates that other more remunerative employment opportunities remain limited. Another pointer to the economic distress at the lower end of the income distribution scale comes from the National Crime Records Bureau report — there has been a rise in suicides by daily wage earners and in 2021, daily wage earners accounted for a fourth of suicides in the country. As this paper has also reported, in 2021-22 over 2.3 crore life insurance policies were surrendered way ahead of their maturity by policy holders — this was more than thrice the number of policies surrendered the previous year. Other indicators point to subdued household purchasing power. As per data from SIAM, in 2021-22, sales of two-wheelers were lower than their 2019-20 levels by almost a quarter. Similarly, as per CRISIL, sales of cars priced below Rs 10 lakh grew by a mere 7 per cent in 2021-22, while those priced above Rs 10 lakh (the premium segment) grew by 38 per cent.

The bigger picture that emerges is one of pain at the lower and middle levels of income distribution. As policymakers navigate the tumultuous global macroeconomic environment, they must be mindful of the highly uneven nature of the recovery, and take measures to address the distress of the most vulnerable.