Recently, the World Bank released a Poverty and Equity Brief on India, which presents a complex picture of the socio-economic landscape of India. In the brief, questions are raised regarding the credibility of economic inequality and the reliability of these data in analysing socio-economic trends. In this article, we have discussed India’s Poverty Picture.
Key Findings of the Report
(i) Decline in Extreme Poverty: Extreme poverty, earning $2.15 per day (2017 PPP terms), fell from 16.2% in 2011 to 2.3% in 2022. So, lifting 171 million people out of poverty. Also, in rural areas, extreme poverty fell from 18.4% to 2.8%, and extreme poverty in urban areas from 10.7% to 1.1%, reducing the rural-urban gap.
(ii) Lower-Middle-Income Poverty Line: The World Bank introduces a broader measure of poverty at $3.65 a day (PPP terms). So, it is reflecting the challenges faced by low and middle-income countries.
(iii) Regional Contributions: Five populous Indian states – Uttar Pradesh, Maharashtra, Bihar, West Bengal, and Madhya Pradesh – shelter 65% of the total extreme poor in 2011-12, which helped in two-thirds of the total decline by 2022-23.
(iv) Inequality Trends: The consumption-based Gini index improved from 28.8 in 2011-12 to 25.5 in 2022-23, indicating reduced inequality.
(v) Employment Growth: It has raised the working-age population since 2021-22, with increasing employment rates among women.
Challenges Highlighted By the World Bank
(i) Income & Gender Disparities: The average earnings of the top 10% were 13 times more than those of the bottom 10% in 2023-24, showing long-lasting income inequality.
(a) Gender inequality is also there, with 234 million more men in paid work compared to women.
(b) Unemployment in youth remains high at 13.3%, increasing to 29% among tertiary education graduates.
(ii) Urban-Rural Divide: While the urban-rural gap has diminished from 84% to 70%, inequalities in access to opportunities and resources remain significant.
(iii) Conflicting Observations on Migration Trends: It notes a recent shift of male workers from rural to urban areas. But it contradicts Periodic Labour Force Survey (PLFS) data showing an increase in agricultural employment.
(a) A 2024 study by the Economic Advisory Council to the Prime Minister reported a decline in rural-to-urban migration. Due to this, it created data inconsistencies that require closer examination.
Key Factors Behind the Decline in Extreme Poverty
(i) Impact of Household Consumer Expenditure Surveys (HCESs) Methodology: To understand consumption patterns more accurately, a revised methodology of HCESs of 2022-23 was done, eventually capturing the decline. Even though extreme poverty is dissipating, the data shows that many individuals still struggle with a basic standard of living.
(ii) Food Security Schemes: The distribution of food grains to 80 crore people played a pivotal role in reducing poverty. Such steps and initiatives have ensured the basic survival needs of many, ultimately reducing poverty rates.
(iii) Direct Benefit Transfers (DBTs): Programs like Jan Dhan Yojana and PM Kisan Samman Nidhi Yojana have ensured that vulnerable populations get financial support for their livelihood.
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Other Flagship Initiatives
(a) Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA): Under this, rural households get 100 days of guaranteed employment annually. It focuses on strengthening the livelihood resource base of marginalised communities.
(b) Mission Antyodaya: A convergence framework to optimise resources allocated by 26 ministries for rural development. Gram Panchayats serve as focal points for implementation.
(c) Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM): With the help of community institutions, it empowers rural women by ensuring technical, financial, and marketing support. It facilitates access to government schemes like Swachh Bharat Mission and Poshan Abhiyan.
(d) Pradhan Mantri Awas Yojana – Gramin (PMAY-G): Under this scheme, the poorest section of society gets housing benefits. It makes sure that the needy only get the benefit of this through a stage validation process.
(e) Pradhan Mantri Gram Sadak Yojana (PMGSY): It ensures connectivity to those habitations which are unconnected to the mainstream. Also, aims for tech-loaded and management standards for rural roads.
(f) Multidimensional Poverty Reduction Initiatives: India’s multidimensional poverty reduced from 29.17% in 2013-14 to 11.28% in 2022-23. It reflects that it took around 24 crore people out of poverty. This index measures deprivation in health, education, and standard of living.
Conclusion
In the end, India’s poverty has reduced significantly. All this happened due to the dispensation’s targeted programs and effective food security measures. However, bottlenecks like persistent inequality, inconsistent data, and difficulty in ensuring the basic standard of living highlight the need for continued efforts. So, here India needs to balance welfare schemes with sustainable economic policies. It will contribute to making society more inclusive and equitable.