Has India Really Eliminated Extreme Poverty Or Has It Stopped Counting Its Poor?

The International Monetary Fund (IMF), in its working paper titled 'Pandemic, Poverty, and Inequality: Evidence from India' said that India kept extreme poverty at the lowest level of 0.8 per cent during the pandemic-hit 2020.

The paper said that the Pradhan Mantri Garib Kalyan Yojana (PMGKAY), which provides free foodgrains to poor people, played a key role in keeping extreme poverty in India.

"Extreme poverty was as low as 0.8 per cent in the pre-pandemic year 2019, and food transfers were instrumental in ensuring that it remained at that low level in the pandemic year 2020," it said.

Under PMGKAY, which was launched in March 2020, the central government provides 5 kilograms of foodgrains per month for free. The additional free grain is over and above the normal quota provided under the National Food Security Act (NFSA) at a highly subsidised rate of Rs 2-3 per kilogram.

Decline in extreme poverty in India

A recent World Bank data noted that extreme poverty in India declined by 12.3 percentage points between 2011 and 2019, with rural areas doing better than urban centres.

¡°We find that extreme poverty in India has declined by 12.3 percentage points between 2011 and 2019 but at a rate that is significantly lower than observed over the 2004-2011 period.

¡°Poverty reduction rates in rural areas are higher than in urban areas,¡± said the paper titled ¡®Poverty in India Has Declined over the Last Decade But Not As Much As Previously Thought¡¯.

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The authors further said urban poverty rose by 2 percentage points in 2016 during the demonetisation event and fell sharply thereafter. Rural poverty rose by 10 basis points in 2019 likely due to a growth slowdown.

The authors also said there was no evidence of rising consumption inequality in their analysis.

The paper noted that farmers with small landholding sizes have experienced higher income growth.

Growing poor and rising inequality

When the pandemic struck India, India was in its lowest economic growth in over a decade.

According to the latest Oxfam report on inequality, the COVID-19 pandemic pushed more than 4.6 crore Indians into extreme poverty.

The country also added 40 new billionaires to the country.

Since the beginning of the pandemic, 84 per cent of Indian households saw a decline in their income, while the wealth of Indian billionaires increased more than double, rising from US$313 billion in 2020, to US$719 billion in 2021.

The report's India-focused supplement further confirmed the findings of the World Inequality Report 2022 - that India is now one of the most unequal countries around the world.

India has not counted its poor since 2011

The World Bank¡¯s biennial Poverty and Shared Prosperity Report: Reversals of Fortune was released October 7, 2020. The findings were not unexpected. For the first time in two decades, the global poverty rate would go up due to the novel coronavirus disease (COVID-19) pandemic.

In the report, the World Bank couldn't seem to get the exact number of poor people in the world, considering the global target of achieving zero poverty by 2030.

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The multilateral body couldn¡¯t measure the real poverty situation in the world because India did not have the latest data. Or, in simple terms, India has stopped counting its poor. ¡°The lack of recent data for India severely hinders the ability to monitor global poverty,¡± the report said.

India has the highest number of poor in the world

India, along with Nigeria, is considered to have the largest number of the poor in the world. India tops the global list in terms of the absolute number of poor, going by the last national survey of 2012-13. The country accounted for 139 million of the total 689 million people living in poverty in 2017.

India was to release its latest household consumer expenditure survey data by the National Statistical Office (NSO, 75th round) for 2017-18 last year. Consumption expenditure is taken as a proxy for gauging income levels in India.

However, India did not release the data. The unpublished data was, however, released in a few newspapers that indicated a rise in poverty level.

The latest data on poverty in India is from a survey done in 2011-12, or almost a decade old.

The absence of poverty data means there is no objective and updated estimation of the global poverty level, or the progress in its reduction.

It also means that estimates of India eliminating extreme poverty might not be entirely true if the government does not have data on the number of people living in poverty in the country.

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