Has India Managed To Banish Its Poverty?

A National Council of Applied Economic Research paper published this week claims India’s poverty has come down drastically to 8.5 per cent from 21.2 per cent calculated in 2011-12 and 29.5 estimated in 2014 by the Dr C Rangarajan committee.

Earlier this year, NITI Aayog CEO B V R Subrahmanyam had also said the latest consumer expenditure survey indicates that poverty has dipped to 5 per cent and people are better off both in rural and urban areas. Has India really managed to nearly banish poverty? If so, why does it need to spend such huge sums of money in subsidising food rations for the poor?

Certainly, India’s GDP has grown substantially but much of that income growth has been for people in the top 10 per cent income bracket. The bottom 30 per cent has seen far slower income growth and has been hit by far worse inflationary pressures.

The problem with these claims that poverty has been triumphed over, is that the calculations are not using any fixed poverty count yardstick; nor has it fixed what the poverty line is in 2024. It’s basing its calculations on other yardsticks and then referencing them with a poverty line drawn up two decades ago by the Tendulkar committee.

The NCAER paper titled ‘Rethinking Social Safety Nets in a Changing Society,’ used data from the newly completed Wave 3 of the India Human Development Survey (IHDS) as well as data from Waves 1 and 2 of the IHDS. However, the fact remains that the  Household Consumption Expenditure Survey of 2022-23 shows that the average monthly household expenditure (at 2011-12 prices) is about Rs 68.5 a day in rural ($0.8 at an exchange rate of 83) and Rs 118.1($1.4) in urban areas. Earning less than a dollar can hardly be the benchmark for pushing an individual out of poverty, especially in a country where 67 % of the population depends on free rations for survival.

The World Bank, in its country profile for India, stuck to a poverty line of US $ 2.15 a day (purchasing power parity) and calculated that over 12.9 per cent of Indians were poor in 2021. Since then a global pandemic has pushed many more people down the income scale.

In fact, the Periodic Labour Force Survey data from 2017-18 to 2022-23 shows that there has been a substantial increase in informal and low-paying jobs besides a surge in self-employment. At the same time, people seeking jobs under the Mahatma Gandhi National Rural Employment Scheme have increased, engaging some 93 million individuals during FY19-FY24 (up to February 2024).

The latest Jan-March 2024 periodic survey of the labour force, brought out by the central government, showed that urban unemployment for those in the age group 15-29 was as high as 17 per cent during January-March 2024, with a dozen states reporting an over 20 per cent unemployment rate during this period. These figures hardly look like those for a country that has been able to virtually banish poverty (almost).

Published on: Thursday, July 04, 2024, 10:00 AM IST