Economy

Covid-19 will result in greater income inequality and unemployment, says Kaushik Basu

M Ramesh | Updated on April 02, 2020 Published on April 02, 2020

Kaushik Basu

Sees increasing automation in post-coronavirus world

Coronavirus will go, but the kind of world it will leave behind will be a very different one than now. There are widely varying views on how the new world will look, with each expert looking at it from his or her perspective.

Dr Kaushik Basu, Professor of Economics at the Cornell University, US, and former Chief Economic Adviser to Government of India, believes that income inequalities will rise after the coronavirus episode.

He feels, “we will come out into a much more automated world.” These months of working from home “will cause a jump in our level of comfort” with technologies such as Zoom, Skype and Facetime.

"We may begin to see many more universities where students do not come to campus but turn on their zoom sitting at home,” Dr Basu said.

Impact on labour, health sectors

All this will inevitably have consequences on labour. “In the last 40 years, the world saw a steady decline in the relative demand for labour,” Dr Basu, a former Chief Economist in the World Bank, observed in an email interaction with BusinessLine.

There will be a sharp increase in the trend (of decline in the relative demand for labour). “This will create new opportunities but also greater income inequality and higher unemployment,” he said, adding that countries that are able to re-train their workers to do more creative work would fare better.

“I also think that the health sector will see huge growth — more doctors, more nurses, more pharmaceuticals and more medical research. Nations that gear themselves better for this will do well and by the same argument, others will do worse,” Dr Basu said.

Asked about India’s prospects in the post-coronavirus era, Dr Basu stressed on upholding democratic institutions. “If India can hold on to its democratic institutions, it can come out on top”.

“Democracy is harder to manage but if done well during times of crisis, it becomes a source of great strength,” he said.

Climate change too

While Dr Basu foresees a rise in income inequality arising out of increasing automation in the post-coronavirus world, others see climate change leading to the same effect.

Writing in CarbonBrief, economists at France’s Center for International Research on Environment and Development (CIRED), Aurélie Méjean, Nicolas Taconet and Céline Guivarch note that climate change could reverse the declining trend in income inequalities seen in recent decades.

“The world today is less unequal than it was in 1990,” they said. However, this trend could reverse if the costs of climate change mitigation “disproportionately fall on the poorest.”

Published on April 02, 2020

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.