According to World Bank data (2017) around 12.9 percent of India’s population earn below $2.15 US Dollar per day, which estimates the income in below poverty line. In addition, Global Poverty Update by the World Bank on September, 2023 revealed that at the $3.65 poverty line, India accounts for 40% of the global poverty rate of 24.1%.
With over a third of all people living in poverty in the world live alone in South Asia, which amounts to roughly 389 million people and the rate of extreme poverty, measured by the international poverty line of $2.15, increased by 1.9 percentage points to 10.5%.
Moreover, a publication of India Development Review documented that at least five estimates of the number of the poor people in India, which put the number of the poor in India between 34 million to 373 million populations i.e. 29 percent (approximately), live under population based on various estimates between 2014 and 2022.
Though, there is no single definition or any appropriate measure to frame or document “True” poverty in various time, place or region. However, economists use various estimates to derive conclusions on poverty: based on household data and unemployment data.
The poverty index is an important to measure the economic progress of a country and also the successful implications of the government policies to improve the lives and standard of livings of the people, who transferred their power to the representatives of the state.
Any person living on Rs. 1000 per month expenditure in cities and Rs. 816 or less in villages, at base year price 2011-12 is poor per the poverty line determined by the Tendulkar’s Committee. Various schemes and facilities can be avail by such people living under poverty, such as subsidised rations under National Food Security Act.
However, another poverty threshold was set up by the Rangarajan Committee in 2014. The estimate of the Rangarajan committee was based on higher than that of Tendulkar’s committee. Since, the government did not accept the estimated report of the Rangarajan Committee. Therefore, the former official poverty line continued. Both, Tendulkar’s committee and Rangarajan Committee used expenditure based on the consumption data issued by National Statistical Organisation from 2011-12 to determine the poverty line.
Poverty elimination in India: What does data say?
The consumption expenditure data (2022-23) has been just released which provides the first official survey-based poverty estimates for India in over ten years. Though, the last survey was conducted on 2011-12, but, India missed two rounds of data. In the article, we have only taken two aspects to understand the elimination of poverty:
a) Growth rate and b) Inequality.
- Growth Rate of India: The data shows there has been an improvement in the real per capita consumption i.e. 2.9 percent per annum since 2011-12 and the rural growth rate was estimated to be 3.1 percent per annum, which is significantly higher than the urban growth rate of 2.6 percent.
- Inequality Reduction: The decline in the rural and urban inequality from 36.7 to 31.9 (Urban Gini) and 28.7 to 27.0 (Rural Gini), the findings of the report documented an unprecedented decline in inequality in India.
Factors contributing to poverty in India:
- Limited access to education:
According to the census conducted by India, the literacy rate stands at 74.04 percent and amongst male is 82.14 percent and female is 65.46 percent. Though, despite making strides in improving literacy rates in general, access to education remains outreach for many groups in India in rural and hilly region. Moreover, the existing disparity between male and female literacy rate in India, does highlight the poor access to education in India.
- Unemployment:
Centre for Monitoring Indian Economy (CMIE) documented that unemployment rate in India stood at 9.2 percent in June, 2024 and sharp increase from 7 percent in May, 2024. Moreover, the CMIE’s consumer pyramids household survey shows that female unemployment reached 18.5 percent in the same period last year. At the same time, male unemployment stood at 7.8 percent, slightly higher than 7.7 percent in June, 2023.
- Inadequate healthcare infrastructure:
According to the World Health Organisation (WHO), the current healthcare expenditure of India as a whole is only 3.01% of the GDP, moreover, with 86% of the population residing in rural areas and just 14.5% in urban areas.
- Inequality:
The discrimination on social caste, gender, and ethnicity makes it harder for marginalized groups to experience basic socio-economic advancement. Moreover, the regional disparity contributes more in income gap and further widens the inequality.
Conclusion: A Commentary View
As of January 2024, NITI Aayog's National Multidimensional Poverty Index (MPI) reported that around 25 crore (approximately 250 million) people in India have moved out of poverty, suggesting a positive impact of government schemes. However, when we consider the International Poverty Line of $1 (measured at 1993 purchasing power parity exchange rates); approximately 34% of India's population still lives in poverty. The absence of two rounds of critical data on consumption expenditure complicates our understanding of these figures, making it difficult to draw definitive conclusions.
While the data documents a decline in both rural and urban inequality, and an improvement in real per capita consumption, it’s clear that the fight against poverty is far from over. The fact that 40% of the wealth created between 2012 and 2021 has been captured by just the wealthiest 1% of the population emphasizes the need for more inclusive and equitable growth strategies by the policy makers. This commentary does not seek to paint an overly optimistic or pessimistic picture but rather aims to highlight the need for a deeper, more analysis of the effectiveness of government policies. As India continues its crusade against poverty, a more comprehensive and inclusive approach is essential to ensure that economic growth.
(The author is a columnist and independent researcher in economics. All thoughts and views are the author’s own.)