Poor Sustain On Rs 180: WB
By Shivaji Sarkar
India has 129 million (13 crore) citizens living in extreme poverty in 2024, says the World Bank (WB). These people live on less than Rs 180 a day ($2.5) or Rs 5400 a month. The estimates are based on Indian official statistics.
At today’s feeble pace, it could take more than a century to eliminate poverty as it is defined for nearly half the world for lower middle-class people who live on less than $6.85 per day, according to the Bank’s new Poverty, Prosperity, and Planet Report. A global policy change is hinted at.
On July 17, 2023, Niti Aayog reported a significant reduction in the proportion of poor people in the country, declining from 24.8 per cent to 14.9 per cent during 2015–16 to 2019–21. But the covid period saw difficulties rising and many more slipping below. Even post-covid the lower middle class in India faces a number of challenges, including, rising living costs, job instability, income inequality, high multiple taxation, inflation pressures.
This has made it difficult for lower middle class and poorer families living on $ 6.85 to make ends meet. The costs of essential food products have soared by 50 per cent between 2015 and 2022. This staggering inflation has an especially significant impact on India’s lower middle class and lower class, especially in rural areas. Because, while the prices of many common items have nearly doubled, the “real wage rate” has increased by just 22 per cent since 2015.
The 2023 Global Hunger Index gives India a rank of 111 out of 125 countries. This indicates a hunger severity level of ‘serious’ for the country. This also marks a fall from the previous year’s rank of 107 (2022).
According to research by the State Bank of India, released in February 2024, the poverty rate in the country fell to 4.5-5 per cent in 2022-23. Based on the household consumption expenditure survey data the SBI research attributes the decline to government programmes initiated for the bottom of the pyramid.
In April 2022, the World Bank highlighted that “for each one percentage point increase in food prices, 10 million people are thrown into extreme poverty. If food prices stay this high for a year, global poverty could go up by more than 100 million.” Average decadal inflation in India is at 55 per cent.
According to the United Nations, India managed to lift 415 million citizens out of conditions of multidimensional poverty over a 15-year period “between 2005-06 and 2019-21.”And according to the Pew Research Centre, “the number of people who are poor in India (with incomes of $2 or less a day) is estimated to have increased by 75 million because of the COVID-19 recession.” The World Bank estimated that, globally, the pandemic pushed 71 million additional people into extreme poverty in 2020 and at least one-third came from India.
However, Indian poverty estimations are not definitive since official poverty estimates are not published since 2011-12, Pew says. While some researchers estimate that poverty levels in India have increased, others suggest extreme poverty rates did not rise during the pandemic. India has proposed but not yet adopted official poverty line, in 2014, it was Rs 972 ($12) a month in rural areas or Rs 1,407 ($17) a month in cities. The current poverty line is Rs 1,059.42 ($62) per month in rural areas and Rs 1,286 ($75) per month in urban areas.
Former Reserve Bank Governor, Duvvuri Subbarao, has said that India may still be considered a poor country even after becoming the world’s third largest $3 trillion economy. He says in comparison to other countries, India is the poorest among BRICS and G-20 nations. India’s per capita income is $2,600, which ranks it 139th in the world.
Subbarao says that becoming wealthy doesn’t necessarily mean a country is developed. Even after becoming the third largest economy, the number of poor may remain high. The World Bank’s India Development Update (IDU) says that India’s growth was boosted by public infrastructure investment and an increase in household investments in real estate. This does not alleviate poverty.
This apart, there are understandable concerns about the effects on India’s poor of higher food prices stemming from recent or proposed policy reforms. Over 24 rounds of the National Sample Survey, spanning 1959-94, one finds a strong positive correlation between the relative price of food and India’s poverty rate.
There are wide variations in India’s poverty estimates for 1990s, in part from differences in the methodology and in the small sample surveys they poll for the underlying data. A 2007 report for example, using data for late 1990s, stated that 77 per cent of Indians lived on less than Rs 20 a day (about $0.50 per day).
In 2021-22, 44 per cent of India’s population lived below the lower middle-income poverty line. The Gini index of consumption-based inequality in India has remained high and steady. India’s growth in 2023-24 was driven by strong construction, manufacturing, and services. The World Bank has concern over the top one per cent of India, 92 lakh individuals, earning average Rs 53 lakh a year, with average wealth of Rs 5.4 crore. The high disparity indicates concentration of wealth.
Professor of Economics, Kalim Siddiqui, with University of Huddersfield, finds fault with stress on growth rates that ignore the benefit to the poor. Despite high growth, India is home to the largest number of world’s poor. The neo-liberal free-market IMF policies saw surge of “growth” but not on ameliorating people’s conditions.
Growth has led to a lopsided rise of the corporate and marginalisation of the working class. Siddique finds that despite the high GDP growth rates for the last two decades in India, overall employment has not been growing. The exponentially growing service sector has much smaller share in employment relative to their contribution to GDP. The study finds that neo-liberal pro-corporate policy has not removed poverty and inequality. “There is a lack of discussion about the presence of a large proportion of people living in sub-human conditions and lack of overall and holistic development of human being”.
The World Bank now almost agrees that higher growth is no panacea for removing poverty. The world has to reverse the process from mere growth to improve the working conditions, check on prices and overall inclusive progress. After 1991, The world may see a new policy change shortly. — INFA