India has eliminated extreme poverty: Surjit Bhalla and Karan Bhasin, for Brookings

Bhalla and Bhasin note that it took 30 years for India to witness a similar decline in poverty levels, which has now been witnessed over 11 years

In a major boost for the Indian government before the general elections, a commentary published by a leading American think-tank, The Brookings Institution, authored by economists Surjit Bhalla and Karan Bhasin, has noted that India has eliminated extreme poverty. The assessment, based on the recently released consumption survey, also states that there has been an unprecedented decline in urban and rural poverty. Bhalla and Bhasin note that the data shows a strikingly lower number of poor people in India than those estimated by the World Bank.

This comes days after B V R Subrahmanyam, the CEO of the government’s own think-tank, the Niti Aayog, said that the consumer expenditure survey indicates poverty has come down to 5 percent and people are becoming prosperous both in rural and urban areas.

“High growth and large decline in inequality have combined to eliminate poverty in India for the per person, per day (PPP) poverty line of $1.9  (at 2011 prices). The Headcount Poverty Ratio (HCR) — i.e., the proportion of a population that lives below the poverty line  —  has declined from 12.2 per cent in 2011-12 to 2 per cent in 2022-23.

Rural poverty stood at 2.5 percent, while urban poverty was down to 1 percent. These estimates do not take into account the free food (wheat and rice) supplied by the government to approximately two-thirds of the population, nor utilisation of public health and education,” the authors noted in the commentary published by The Brookings Institution.

The decline in HCR  is remarkable given that in the past it took 30 years for India to witness a similar decline in poverty levels, which has now been witnessed over 11 years. Given the near elimination of extreme poverty, India should now graduate to a higher poverty line, which would provide an opportunity to redefine existing social protection programs in order to give greater support to the genuinely poor, it stated.

“Extreme poverty is now eliminated in India. The world poverty clock update shows India’s extreme poverty at less than 3 percent. This is one of the most significant global developments of our lifetime,” economist Shamika Ravi said in a tweet on March 2.

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 programs. These include a national mission for the construction of toilets, and attempts to ensure universal access to electricity, modern cooking fuel, and more recently, piped water, the Brookings commentary said.

The rural access to piped water in India as of August 15, 2019, was 16.8 percent,  while at present it is 74.7 percent. The reduced sickness from accessing safe water may have helped families earn more income. Under the Aspirational District Program, 112 districts of the country were identified as having the lowest development indicators. These districts were targeted by government policies with an explicit focus on improving their development.

“Official data now confirms that India has eliminated extreme poverty, as commonly defined in international comparisons. This is an encouraging development with positive implications for global poverty headcount rates,” it said.

By MEGHNA MITTAL

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