Let us not underestimate deprivation in the country

Context: Status of extreme poverty in India prior to the pandemic is unclear. The most recent survey data (2017-18) was not officially released, but leaked reports showed a fall in real consumption and an unprecedented rise in poverty.

In the absence of recent official data, two studies have attempted to estimate the numbers:

An IMF working paper by Bhalla, Bhasin and Virmani (BBV) uses the growth rate of private final consumption expenditure (PFCE) from the National Accounts Statistics.

A World Bank paper by Sinha Roy and Van der Weide (SRW) uses consumption data from the CMIE Consumer Pyramids Household Survey.

Also, the National Sample Survey Office is planning to conduct the next round soon.

What are the key findings of the studies?
IMF working paperWorld Bank paper
Extreme poverty rate declined to 3.4% in 2019Extreme poverty rate ($1.9 a day or Tendulkar line) fell from 22% in 2011 to 10% in 2019. This is a healthy decline, though not as rapid as what occurred between 2004-05 (40%) and 2011-12.
The large decline in India’s poverty rate is due to strong consumption growth and a moderation of inflation.
Way forward

It is important to keep sight of the human element and bigger picture.

The $1.9 poverty line is too low. It is time India moves to a higher line, such as $3.2 a day or a line derived from the recommended National Floor Minimum Wage.

The covid outbreak has undoubtedly slowed down progress, but India is moving towards eliminating extreme poverty. Timely data and pro-poor policies will help it get there sooner.

Source: This post is based on the article “Let us not underestimate deprivation in the country” published in Livemint on 3rd May 22.

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