Vax milestone and a K-shaped problem

Synopsis: The Indian economy is facing a K-shaped problem even before the pandemic. But the pandemic worsened the K-shaped problem more.


India has administered more than one billion Covid vaccines since it started its Covid vaccination drive in January. Out of India’s population of about 1.3 billion, 78%, or just over 1 billion, are adults and eligible for vaccination. According to the government, over 31% has received a second dose. According to this, one can assume that around 300 million eligible Indian adults do not receive any vaccine dose and remain unprotected.

Read more: One billion Covid Vaccines and beyond – Explained, pointwise
Why does India’s covid vaccination face a K-shaped problem?

Smartphone penetration is 450-500 million and concentrated in higher-income groups. The vaccination campaign’s “smart design” (CoWin) made it hard for people without smartphone access to sign up. Hence, higher income groups received more vaccine doses. But the lower-income groups majorly comprise the unvaccinated sections.

Note: K-shaped Recovery occurs when an economy recovers unevenly and there’s a separate trajectory for two segments of the society.

Indian economy and the K-shaped problem

India already had a very K-shaped economy, prior to the pandemic. According to the annual Credit Suisse Global Wealth report, by the end-2020, the top 1% rich sections held 40.5% of assets. The GINI Coefficient, a measure of income equality, stayed at a very high 82.3.

But the Unemployment spiked in the April-June 2020 lockdowns, and employment has still not recovered to 2018-19 levels. Furthermore, these employment losses were mostly in the unorganised sector.

Read more:Issue of K-shaped recovery: How government budget can deal with it?
What sectors face the K-shaped problem at present?

The K-shaped problem in education: Higher-income groups with smartphone and broadband coverage have far better access to remote learning. Hence, education, which was inherently K-shaped, has become even more so. This reduces the likely future productivity and much-vaunted demographic dividend of a young workforce.

The K-shaped problem in employment: Corporate results from the last four quarters indicates the organised sector (which is higher-income) has made a much faster recovery than the unorganised sector (which is lower-income and a much larger generator of employment).

The government has to acknowledge these K-shaped recoveries and start focusing on the improvement of sectors that are facing issues.

Source: This post is based on the article “Vax milestone and a K-shaped problem” published in Business Standard on 23rd October 2021.

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