India Officially Eliminates Extreme Poverty: A Comprehensive Analysis of Progress

PWOnlyIAS March 02, 2024 06:24 1264 0

Brookings Report confirms India's historic achievement: Official elimination of extreme poverty. Robust data reveals a transformative socio-economic landscape and sets a global precedent. #PovertyAlleviation #InclusiveDevelopment

India Officially Eliminates Extreme Poverty: A Comprehensive Analysis of Progress

Context: Official Elimination of Extreme Poverty, Brookings Report Confirms

According to a report prepared by the think tank Brookings, India has officially eliminated ‘extreme poverty’. The report is prepared by the think tank Brookings and authored by Surjit Bhalla and Karan Bhasin.

Types of Poverty
Extreme Poverty:	Extreme poverty is characterised by living below the international poverty line, which is typically defined as earning less than $1.90 per day (adjusted for purchasing power parity).
Moderate Poverty:	Moderate poverty refers to living below a higher poverty threshold than extreme poverty, often defined as earning less than $3.20 per day (adjusted for purchasing power parity). The Headcount Poverty Ratio (HCR) for the purchasing power parity (PPP) $3.2 poverty line has declined from 53.6 per cent to 20.8 per cent in India, indicating a significant reduction in moderate poverty levels.
Relative Poverty:	Relative poverty is a measure of poverty relative to the overall distribution of income or wealth within a society. Individuals or households are considered relatively poor if their income or wealth falls below a certain proportion of the median income or wealth in that society. The decline in both urban and rural inequality, as indicated by the reduction in Gini coefficients, reflects a positive trend towards reducing relative poverty in India.
Chronic Poverty:	Chronic poverty refers to persistent, long-term poverty endured by individuals or households over an extended period, often spanning multiple generations. While specific data on chronic poverty may vary, the significant reduction in overall poverty levels, as evidenced by declining Headcount Poverty Ratios across different poverty lines, suggests a positive trajectory towards alleviating chronic poverty in India.
Multidimensional Poverty:	Multidimensional poverty takes into account various factors beyond income, including access to education, healthcare, housing, and basic amenities, to provide a more holistic understanding of poverty. India has registered a significant decline in multidimensional poverty from 29.17% in 2013-14 to 11.28% in 2022-23 i.e. a reduction of 17.89 percentage points. India’s focus on initiatives such as Swachh Bharat Abhiyan (Clean India Mission), Ayushman Bharat (National Health Protection Scheme), and housing for all underscores efforts to address multidimensional poverty by improving access to essential services and infrastructure.
Urban Poverty:	Urban poverty refers to poverty experienced by individuals or households residing in urban areas, often characterized by inadequate housing, limited access to basic services, and informal employment. Urban poverty in India has declined significantly, with the urban Headcount Poverty Ratio decreasing to 1 per cent, indicating improved living standards and economic opportunities in urban areas. According to a World Bank paper, India’s poverty rate had declined to 11.6% for rural areas and 6.3% for urban areas in 2018-19. According to SBI Researchers, India’s poverty rate declined to 4.5-5% in 2022-23, with rural poverty declining to 7.2% from 25.7% in 2011-12 and urban poverty down to 4.6% from a decade ago. It estimated the new poverty line or the basic level of consumption required was Rs 1,622 for rural areas and Rs 1,929 for urban areas.
Rural Poverty:	Rural poverty pertains to poverty experienced by individuals or households residing in rural areas, typically characterized by agricultural dependence, limited infrastructure, and lower access to services compared to urban areas. Rural poverty remains slightly higher than urban poverty. However, the significant reduction in rural poverty levels reflects progress in addressing the unique challenges faced by rural communities.

Brookings Report: India Achieves Historic Milestone, Officially Eradicates Extreme Poverty

According to think tank Brooking, India has officially eliminated ‘extreme poverty,’ marking a significant milestone in its development journey. The finding of the report is based on Household Consumption Expenditure Survey (HCES) and backed by robust data and analysis, indicating a sharp decline in headcount poverty ratio and a substantial increase in household consumption.

Household Consumption Expenditure Survey (HCES)

It is designed to collect information on consumption of goods and services by Indian households.
Per Capita Consumption Spending Trends:
- Coverage: Survey covered the whole of the country (exception: few inaccessible areas in the Andaman and Nicobar Islands) and Information was collected from 8,723 villages and 6,115 urban blocks which covered around 2,61,746 households. Out of these 1,55,014 were in rural areas and 1,06,732 in urban areas.
- India’s per capita monthly consumption expenditure witnessed a notable increase of 33-40% in 2022-23 compared to 2011-12, reflecting an average annual growth of 3.1% for rural areas and 2.7% for urban areas.
- The average estimated Monthly Per Capita Consumption Expenditure (MPCE) stood at Rs 3,773 in rural India and Rs 6,459 in urban India for the year 2022-23.

Extreme Poverty

Unprecedented Decline in Poverty: Real per capita consumption growth has averaged at an impressive 2.9 percent per year since 2011-12, underscoring sustained economic progress.
- Rural areas have experienced particularly notable growth, with consumption rising at a rate of 3.1 percent annually, surpassing the urban growth rate of 2.6 per cent.
Addressing Inequality: Decline in both urban and rural inequality, with the urban Gini index dropping from 36.7 to 31.9, and the rural Gini index declining from 28.7 to 27.0.
- Reduction in inequality is a testament to India’s commitment to inclusive growth and equitable development.

Extreme Poverty

Impact of Government Policies: Government’s strong policy thrust on redistribution has fostered inclusive growth over the past decade.
- Noteworthy initiatives such as the national mission for constructing toilets, ensuring universal access to electricity and modern cooking fuel have significantly contributed to enhancing household consumption and improving living standards, especially in rural areas.
- Rural access to piped water in India as of 15th August 2019 was 16.8% and at present it is 74.7%.
  - The reduced sickness from accessing safe water may have helped families earn more income.
- Aspirational District Program, 112 districts of the country were identified as having the lowest development indicators.
Data Insights: The Headcount Poverty Ratio (HCR) for the purchasing power parity (PPP) $1.9 poverty line has declined from 12.2 per cent in 2011-12 to a mere 2 per cent in 2022-23, reflecting a annual decline of 0.93 percentage points.
- Rural poverty has decreased to 2.5 per cent, while urban poverty has declined even further to 1 per cent, affirming the effectiveness of targeted poverty alleviation measures.

Extreme Poverty

Global Recognition: It signals a transformative shift in the country’s socio-economic landscape and sets a positive precedent for global poverty reduction efforts.
Future Perspectives: India should now graduate to a higher poverty line, aligning with international standards.
- This transition presents an opportunity to refine existing social protection programs, ensuring better targeting and support for the genuinely impoverished.
- India can now graduate to a higher poverty line which would help redefine existing social protection programs, better identify those in need and thus provide greater support to those who are still poor.

Conclusion

India’s official elimination of extreme poverty stands as a testament to its unwavering commitment to inclusive development and socio-economic progress. This milestone underscores the transformative impact of targeted policies and interventions in uplifting millions of lives and creating a more equitable society. As India charts its course towards higher poverty thresholds, the focus remains on ensuring that the dividends of growth are shared equitably, leaving no individual or community behind in the journey towards prosperity and well-being.

While celebrating this monumental achievement, it is imperative to acknowledge that challenges persist, and sustained efforts are required to address issues of poverty, inequality, and inclusive development comprehensively.
The government and stakeholders must remain committed to implementing evidence-based policies and interventions aimed at fostering sustainable and equitable growth, leaving no one behind.

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Frequently Asked Questions

HCES gathers data on goods and services consumption by Indian households to assess economic well-being.

India saw a notable 33-40% increase in per capita monthly consumption expenditure in 2022-23.

Poverty significantly declined, with the headcount poverty ratio dropping from 12.2% in 2011-12 to 2% in 2022-23.

Government policies like toilet construction, electricity access, and modern cooking fuel distribution played crucial roles.

India aims to transition to a higher poverty line, aligning with international standards for better social protection programs.

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India Officially Eliminates Extreme Poverty: A Comprehensive Analysis of Progress

Context: Official Elimination of Extreme Poverty, Brookings Report Confirms

Types of Poverty

Extreme Poverty:

Moderate Poverty:

Relative Poverty:

Chronic Poverty:

Multidimensional Poverty:

Urban Poverty:

Rural Poverty:

Brookings Report: India Achieves Historic Milestone, Officially Eradicates Extreme Poverty

Household Consumption Expenditure Survey (HCES)

Conclusion

Frequently Asked Questions

What is the Household Consumption Expenditure Survey (HCES)?

How did India fare in per capita consumption spending trends?

What were the key findings regarding poverty reduction in India?

What initiatives contributed to poverty alleviation in India?

What are the future plans for poverty measurement in India?

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