The government has set a target to eradicate ‘extreme poverty’ by 2030, and is developing a national indicator to measure it on a periodic basis. Priyansh Verma analyses the evolution of the policy on measurement of poverty in India.
l What is extreme poverty?
THE CENTRAL GOVERNMENT recognises anyone with an income below $1.25/a day (at purchasing power parity) as living in “extreme poverty,”in sync with a definition adopted by the United Nations (UN) in 2015, as the number one item under “Sustainable Development Goals’ (SDGs). Even though extreme poverty has witnessed a decline in recent decades, the gains were erased partly due to the onset of the pandemic. The figure of $1.25 per person per day was adopted by India in 2015 and has not been revised since then.
As per the National Sample Survey Office (NSSO) survey in 2011-12, as many as 21.9% of the total population, or 269.3 million people were found to be living in poverty (extreme poverty).
According to the UN, nowcasting suggests that 8.4% of the world’s population (670 million people), could still be living in extreme poverty by the end of 2022. If the current patterns persist, an estimated 7% of the global population – 575 million – could still find themselves trapped in extreme poverty by 2030, with a significant concentration in sub-Saharan Africa.
l What is the World Bank threshold ?
THE WORLD BANK defines any person with an income below $2.15 per day (in PPP terms) as living in extreme poverty. The figure was updated in 2023, after adjusting for inflation. Post adjustment, it said the number of people living in such conditions are 659 million. As a result of the revision in 2023, 11 million more people were categorised as living in extreme poverty, largely driven by South Asia (5 million, India included) and the Middle East and North Africa (4 million). As many as 161 million live in extreme poverty in South Asia, and 391 million in Sub-Saharan Africa. In case, the poverty line is raised to $3.65, as many as 28 million more people will fall under the category of living in extreme poverty. At $6.85, about 44 million more people will come within this category.
The World Bank notes that the upward revisions in poverty estimates at the higher thresholds are largely driven by South Asia and Sub-Saharan Africa.
l Earlier attempts by India to define it
AN EXPERT GROUP headed by Suresh Tendulkar , which reviewed the methodology for estimation of poverty, submitted its report in December 2009 and computed poverty lines and poverty ratios for 2004-05. It estimated the poverty line at Rs 33 per day. Till date, the Tendulkar line is the only officially accepted marker of poverty. The last survey of estimating poverty based on the Tendulkar line was done by the NSSO in 2011-12, and its results were released in June 2013. In 2013, the government had set up a committee under the chairmanship of former RBI governor C Rangarajan, to revisit the Tendulkar line. The Rangarajan committee had fixed the poverty line at Rs 47 a day. But no survey till date has been done on this basis. Interestingly, the World Bank definition of extreme poverty roughly corresponds to the poverty line computed by the Tendulkar committee for 2004-05 (Rs 33 per day), if adjusted for inflation.
l Extreme vs multidimensional
ANOTHER WAY TO count the poor is to look at multidimensional poverty. This captures overlapping deprivations (dimensions of poverty) in health, education and living standards. At present, India measures poverty in terms of deprivation-based approach, and not income-based. Under the Global Indices for Reforms and Growth (GIRG) mandate approved by the government in February 2020, 29 select global indices are monitored to evaluate and improve India’s global ranks.
The nodal agency for monitoring multidimensional poverty, NITI Aayog, has developed an index, in coordination with various central ministries and with the support of technical partners UNDP, Oxford PHI, and the conductors of the National Family Health Survey (NFHS). The national multidimensional poverty index (MPI) is in step with the SDG, which aims to reduce “by at least half the proportion of all men, women and children of all ages living in poverty in all its dimensions according to national definitions” by 2030.
l What the latest numbers say
IN JANUARY 2024, the NITI Aayog said an estimated 248.2 million people moved out of multidimensional poverty between 2013-14 and 2022-23. Based on the interpolation of the MPI estimates between 2005-06 and 2015-16, the headcount ratio for 2013-14 comes to 29.17%. The proportion of multidimensional poverty for 2022-23 is projected to be 11.28% based on the trend rate of 10.66% decline per year between 2015-16 and 2019-21.
In its latest progress report of achieving SDGs, the ministry of statistics and programme implementation noted the government’s comprehensive strategy to eliminate poverty in all forms, has led to a drastic fall – about 10 percentage points – in the proportion of men, women and children of all ages living in poverty “in all its dimensions”. Between 2015-16 and 2019-21, the percentage of people living in poverty fell from 25% to 15%. This has been possible due to sustained economic growth (6.7% average growth between FY16-FY20), and welfare schemes.