The data presented an unprecedented decline in both urban and rural inequality.
The urban Gini (x100) (index to measure inequality) declined from 36.7 to 31.9; the rural Gini declined from 28.7 to 27.0.
New Delhi: According to a research by the American think tank Brookings, India has officially eliminated “extreme poverty,” as demonstrated by a substantial fall in the headcount poverty ratio and a stark increase in household spending. The authors of the research, Surjit Bhalla and Karan Bhasin, claim that this is the outcome of the government’s aggressive redistribution policy push, which for the past ten years has produced robust inclusive growth in India.
Survey Based Poverty Estimates
India has just released its official consumption expenditure data for 2022-23, providing the first official survey-based poverty estimates for India in over ten years.
The data shows that during 2011–12, real per capita consumption growth has been observed at 2.9% annually. Accordingly, the 3.1% growth in rural areas surpassed the 2.6% growth in urban areas.
Additionally, the data showed an unparalleled decrease in inequality in both urban and rural areas.
The rural Gini fell from 28.7 to 27.0, whereas the urban Gini (x100), an index used to evaluate inequality, decreased from 36.7 to 31.9.
In the annals of inequality analysis, this decline is unheard of, and especially in the context of high per capita growth.
What Helped In Eliminating Poverty
According to Brookings, high growth and large decline in inequality have combined to eliminate poverty in India for the Purchasing Power Parity USD 1.9 poverty line.
The Headcount Poverty Ratio (HCR) for the 2011 PPP USD 1.9 poverty line has declined from 12.2 per cent in 2011-12 to 2 per cent in 2022-23, equivalent to 0.93 percentage points (ppt) per year. Rural poverty stood at 2.5 per cent while urban poverty was down to 1 per cent.
For the PPP USD 3.2 line, HCR declined from 53.6 per cent to 20.8 per cent.
However, the think tank noted that these estimates do not account for the free food (rice and wheat) that the government provides to around two-thirds of the population, not for the use of public health and education. At both criteria, the results reveal a remarkably less number of impoverished individuals in India than those projected by the World Bank.
India’s Headcount Poverty Ratio
The Brookings report presented a chart showing India’s Headcount Poverty Ratio for both the 1.9 USD PPP and the 3.2 USD PPP from 1977-78. It stated that the change in slope of the HCR for the higher 3.2 USD poverty line “reveals the extent of inclusive growth experienced in India over the last decade.”
The decline in HCR at the higher poverty line is remarkable given that in the past it took 30 years for India to witness a similar decline in poverty levels as now witnessed over 11 years, it added.
The authors are of the opinion that the relatively higher consumption growth in rural areas should not come as a surprise given the “strong policy thrust on redistribution through a wide variety of publicly funded programmes.”
Brookings lauded the national mission for the construction of toilets and attempts to ensure universal access to electricity, modern cooking fuel, and, more recently, piped water, among the policies that thrived consumption.
The rural access to piped water in India as of August 15, 2019 was 16.8 per cent and at present it is 74.7 per cent, the report cited. The reduced sickness from accessing safe water may have helped families earn more income.
Aspirational District Programme
Similarly, under the Aspirational District Programme, 112 districts in the country were identified as having the lowest development indicators. These districts were targeted by government policies with an explicit focus on improving their performance in development.
According to official data, India has successfully eradicated extreme poverty, as it is generally referred to in international comparisons. According to the Brookings paper, “this is an encouraging development with positive implications for global poverty headcount rates.”
This implies that India must now advance to a higher poverty line in line with other nations. The research by Bhalla and Bhasin stated that “the shift to a higher poverty line offers an opportunity to redefine existing social protection programmes, particularly with the objective of better identification of intended beneficiaries and greater support to the genuine poor.”
(With inputs from ANI)
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