Poverty Estimates in India

About Poverty

• Poverty refers to lack of enough resources to fulfil the necessities of life—food, clean water, shelter and clothing. The World Bank defines extreme poverty as living on less than US$1.90 per day

Poverty Estimates in India

• Estimates of poverty and inequality in India have been deeply contested.
• Differences exist among economists on data which forms the basis of their estimation & on trends over past decades.
• In the absence of official data for recent years — the last consumption expenditure survey, which forms the basis of poverty and inequality estimates, was for 2011-12
• There are sharp differences of opinion even on the extent to which the pandemic exacerbated poverty and inequality. In the absence of official data, several economists have put forth their estimates based on different data sources.
  • Arvind Panagariya and Vishal More used PLFS data – found that rural poverty “saw a modest rise” only during the strict lockdown period of April-June 2020, and then declined as sharply as in the pre-Covid period. And that while urban poverty also saw a “modest rise” in 2020-21, by April-June 2021 its decline had resumed.
  • While, as per the “State of working India 2021” report based on CMIE data – economists at Azim Premji University found that the pandemic led to a “sudden increase in poverty”. As per the report, over an eight month period (March to October 2020), average incomes of the bottom 10 percent of households were lower by Rs 15,700. This income shock caused an increase in the poverty rate (below the national minimum wage threshold) by 15 percentage points in rural areas and nearly 20 percentage points in urban areas.
  • Research by Arpit Gupta, Anup Malani and Bartosz Woda – also based on CMIE data – found that income poverty, applying the World Bank’s $1.9 cutoff, rose from 7.6 per cent in November 2019 to 50.5 per cent in April 2020. And that while poverty did fall subsequently, it did not recover to pre-pandemic levels.
  • Other indicators suggest that more workers fell back on agriculture indicating the absence of non-farm employment. More individuals worked under MGNREGA than in the pre-pandemic period. Regular real wages witnessed a decline. And, sales of two-wheelers remain subdued.
• Other existing estimates:
  • Tendulkar committee (2011): 21.9% of the population under BPL.
  • Rangarajan committee (2014): 29.5% of the population under BPL.
  • Global Multidimensional Poverty Index, 2020: India is 62nd among 107 countries with an MPI score of 0.123. India is home to 228.9 million poor people.

Poverty alleviation programmes in India

• Integrated Rural Development Program: Launched on 2 October 1980, aims to provide a self-employment program to poor rural families to help them increase their income and cross the poverty line
• PM Gramin Awas Yojana: to provide housing for the rural poor in India. A similar scheme for urban poor was launched in 2015 as Housing for All by 2022. So far, 1.26 crore houses have already been built across the country under the scheme (June 2021)
• National Rural Livelihood Mission: a poverty alleviation project to organise the poor into SHG (Self Help Groups) groups and make them capable of self-employment
• National Urban Livelihood Mission: to reduce poverty and vulnerability of the urban poor households by enabling them to access gainful self-employment and skilled wage employment opportunities
• MGNREGA: provides a legal guarantee for one hundred days of employment in every financial year to adult members of any rural household willing to do public work-related unskilled manual work at the statutory minimum wage
• National Food Security Act, 2013: The Act legally entitled upto 75% of the rural population and 50% of the urban population to receive subsidised food grains under Targeted Public Distribution System
• National Social Assistance Programme: To provide support to aged persons, widows, disabled persons and bereaved families on death of primary breadwinner, belonging to below poverty line households

Way Forward

• In the absence of official consumption expenditure data, reliance on alternate data sources has only risen, giving rise to conflicting trends.
• As understanding the trends in poverty and inequality, and their underlying reasons, is critical for designing government policies and programmes, the scenario of absence of relevant data is harmful for policy formulation.
• The absence of timely and reliable data, especially during times of uncertainty, needs to be addressed.
• While some steps have been taken — employment surveys are now carried out with greater regularity — more needs to be done. The country’s statistical system needs to be strengthened.