SBI research report, popularly known as Ecowrap, has recently said that the inequality gap in the country will narrow down post-COVID-19 pandemic as decline in income of rich states will be much greater than the decline in income of poor states.

The report also talked about country’s per capita income (PCI), which is a measure of the earnings per person in a nation or geographic region, will decline by 5.4 per cent in FY21 to Rs 1.43 lakh.

The report said this decline in PCI is higher than the nominal GDP decline of 3.8 per cent. Globally also, the fall in per capita GDP of 6.2 per cent in 2020 is significantly greater than the 5.2 per cent decline in the world GDP.

As per the report, the rich states, whose per capita income is greater than all India average, will be most affected in PCI terms.

The data sows, decline in PCI of developed states is almost thrice than the decline at all India levels (-5.4 per cent). For example, Delhi’s PCI fell by 15.4 per cent and the PCI of Chandigarh plunged by 13.9 per cent.

The report witnessed similar trends in total eight states and Union Territories where the PCI declined by double digits in FY21. The information is even more alarming as these states constitute as much as 47 per cent of the country’s GDP.

Of course, red zones in the urban areas, where lockdown was implemented most severely, contributed a lot to the drop in the PCI, the report noted. The fall was further backed by the closure of markets, shopping complexes and malls, the report said.

Even after opening of markets (in staggered manner), the number of customers is still 70-80 per cent less than the normal times, the report said.

In the current fiscal, states like Maharashtra, Gujarat, Telangana, and Tamil Nadu are expected to witness a decline of 10-12 per cent in PCI. However, in the relatively less well off states like Madhya Pradesh, Uttar Pradesh, Bihar, Odisha (where per capita income is below the national average) the decline in PCI is less than 8 per cent, the report said.

The possible reasons are a larger number of green zones, prominence of agricultural activity and already low levels of income, it added.

The report projects a GDP decline of 6.8 per cent for FY21.

We believe that the country will clearly have a ‘statistical V-shaped recovery or Swoosh’ in FY22 primarily due to the favourable base effect, it said.

Beyond such base effect, it would, however, take at least till FY24, if the country replicates the best case example in history, if not more before it gets back to the pre-pandemic level growth rate, the report noted.