Extreme poverty dipped in India: World Bank report

Poverty reduction was higher in rural areas compared with urban India as rural poverty declined from 26.3% in 2011 to 11.6% in 2019, while in urban areas the decline was from 14.2% to 6.3% in the corresponding period
Urban poverty in India rose by 2 percentage point in 2016, coinciding with the demonetisation, and rural poverty rose by 10 basis points in 2019, coinciding with a slowdown in the economy. (Representational image) PREMIUM
Urban poverty in India rose by 2 percentage point in 2016, coinciding with the demonetisation, and rural poverty rose by 10 basis points in 2019, coinciding with a slowdown in the economy. (Representational image)
Updated on Apr 18, 2022 03:52 PM IST
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ByRajeev Jayaswal

Extreme poverty in India was 12.3 percentage points lower in 2019 compared with 2011, as poverty headcount rate declined from 22.5% in 2011 to 10.2% in 2019, with a comparatively sharper decline in rural areas, a working paper of the World Bank policy research said.

The findings came close on the heels of a working paper published by the International Monetary Fund (IMF) saying India has almost eradicated extreme poverty and brought down consumption inequality to its lowest levels in 40 years through state-funded food hand outs. HT reported it on April 7. Working papers of the multilateral institutions are not their official position.

Poverty reduction was higher in rural areas compared with urban India as rural poverty declined from 26.3% in 2011 to 11.6% in 2019, while in urban areas the decline was from 14.2% to 6.3% in the corresponding period, the World Bank paper said.

“Rural and urban poverty dropped by 14.7 and 7.9 percentage points during 2011-2019,” said the working paper titled Poverty in India Has Declined over the Last Decade But Not As Much As Previously Thought.

The paper is authored by economists Sutirtha Sinha Roy and Roy van der Weide. The World Bank policy research working papers aim to encourage exchange of ideas on development, and quickly disseminates the findings of research in progress.

Smallholder farmers have experienced higher income growth, according to the study. “Real incomes for farmers with the smallest landholdings have grown by 10 percent in annualized terms between the two survey rounds (2013 and 2019) compared to a 2 percent growth for farmers with the largest landholding,” it said.

The World Bank’s paper is significant as India has no official estimation of recent periods. The last expenditure survey was released in 2011 by the National Sample Survey Organisation (NSSO), when the country had also released official estimates of poverty and inequality.

“This paper sheds light on how poverty and inequality have evolved since 2011 using a new household panel survey, the Consumer Pyramids Household Survey conducted by a private data company,” the authors said. In view of the data quality issues, in November 2019, the ministry of statistics and programme implementation (MOSPI) had decided to hold the release the consumer expenditure survey results of 2017-18.

Urban poverty in India rose by 2 percentage point in 2016, coinciding with the demonetisation, and rural poverty rose by 10 basis points in 2019, coinciding with a slowdown in the economy, according to the World Bank’s research paper.

“We detect two incidences of rising poverty in our period of analysis: urban poverty rose by 2 percentage points in 2016 during the demonetization event and fell sharply thereafter; and, rural poverty rose by 10 basis points in 2019 likely due to a growth slowdown,” the paper said.

The paper also talked about consumption inequality. “We observe a slight moderation in consumption inequality since 2011, but by a margin smaller than what is reported in the unreleased NSS-2017 survey,” the authors said. “Finally, the extent of poverty reduction during 2015-2019 is estimated to be notably lower than earlier projections based on growth in private final consumption expenditure reported in national account statistics.”

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Tuesday, June 28, 2022