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All dollar figures are expressed in 2011 prices and purchasing power parity dollars, currency exchange rates adjusted for differences in the prices of goods and services across countries. The poor live on $2 or less daily, low income on $2.01-$10, middle income on $10.01-$20, upper-middle income on $20.01-$50 and high income on more than $50. The population in each country is divided into five groups: poor, low income, middle income, upper-middle income and high income. The number of people in the middle-income tier likely decreased by 10 million, and poverty was virtually unchanged. The largest impact in China is the estimated addition of 30 million people to the low-income tier (incomes of $2.01-$10 a day). The change in living standards in China is more modest than in India. The number now participating is setting record highs in the program’s 14-year history.

Perhaps not surprisingly, media reports from India point to a spike in participation in its rural employment program – originally intended to combat poverty in agricultural areas – as the many who have lost jobs in the reeling economy seek work. This, too, accounts for nearly 60% of the global increase in poverty. Meanwhile, the number of people who are poor in India (with incomes of $2 or less a day) is estimated to have increased by 75 million because of the COVID-19 recession. This accounts for 60% of the global retreat in the number of people in the middle-income tier (defined here as people with incomes of $10.01-$20 a day). In January 2021, nearly one year into the pandemic, the World Bank revised these growth estimates downward to -9.6% for India but forecast 2% growth for China.Ī new Pew Research Center analysis finds that the middle class in India is estimated to have shrunk by 32 million in 2020 as a consequence of the downturn, compared with the number it may have reached absent the pandemic. In January 2020, economic forecasts from the World Bank pointed to virtually the same growth in real gross domestic product (GDP) in India (5.8%) and China (5.9%) in 2020. While India plunged into a deep recession in 2020, China was able to forestall a contraction. The difference between these two measures is used to represent the effect of the pandemic on the income distribution in each country. One projection is based on the World Bank’s January 2020 forecasts of economic growth in 2020, and the other is based on its January 2021 estimates of growth in 2020. These benchmark estimates are extrapolated to 2020 using World Bank estimates of output growth through 2020.

The latest year for which survey data on the numbers of people in each income tier are available is 2011 for India and 2016 for China. The key data source for the analysis is the World Bank’s PovcalNet database, which provides access to household survey data on either income or consumption for more than 160 countries. See the methodology and an earlier Pew Research Center report for more on the definition and meaning of these tiers in a global context. The focus is on the distribution of people across five income tiers in 2020: poor, low income, middle income, upper-middle income and high income. This analysis looks at how the downturn has affected the standard of living in India and China, the two most populous countries in the world. The COVID-19 pandemic has created an economic crisis, shuttering businesses and cutting jobs around the world.