Is there still poverty in India 1

Need for improvement despite solid progress

India is well on the way to ending extreme poverty. At the same time, however, the social gap has widened further in recent decades.

In May 2018, it was reported that India is no longer the country with the largest number of extremely poor people in the world. This is a record that no country is aiming for, but one that India held for a long time, not least because of its huge population of around 1.3 billion people today.

According to the Brookings Institution, there were 87 million people in Nigeria in extreme poverty in May, compared with just 73 million in India. The think tank also noted that in Nigeria the number was growing by six people every minute, while in India it was steadily decreasing.

This Brookings assessment was based on data from various international organizations. It uses the World Bank definition, according to which people are extremely poor when their purchasing power is less than $ 1.90 per capita per day.

Indian studies point in the same direction. The Indian National Sample Survey Organization will publish new data soon, but the economist Surjit Bhalla, who advises the government, has already announced that the percentage of extremely poor people in the population has dropped from around 21 percent in fiscal 2011/12 to around 5 percent decreased in 2017/18.

The trend looks good, but many professionals doubt that it is cause for celebration. A number of other development indicators appear bleak. Nobel laureate in economics, Amartya Sen, points out that India lags behind neighboring countries (with the exception of Pakistan) on many socio-economic parameters. This is especially true for health and education. The annual per capita income in Bangladesh is around 1550 dollars and in Nepal with 840 dollars, lower than in India (1950 dollars). Still, the under-five mortality rate is lower in both countries. In India, 39 children died for every 1,000 live births in 2017. The comparative figure for Bangladesh was 32 and for Nepal it was 34.

Signs of rural poverty also tarnish the image of a prosperous nation. Farmers' suicide rates are very high and typically the cause is over-indebtedness.

Defining poverty precisely is difficult and has been the subject of heated discussions in India for a long time. Success in a government is often measured by its progress in reducing poverty. In the past, only the monetary value of the daily calorie requirement was used for this. But in 2009 the Tendulkar Commission adopted a multi-dimensional method for estimating poverty (see E + Z / D + C 2010/12, p. 464). In addition to food requirements, it also takes into account things such as clothing, shoes, durable consumer goods, education and health. The new method showed that poverty in India was worse than expected.

The World Bank recently presented a new definition of poverty for low-middle-income countries. Accordingly, those who have a purchasing power of at most 3.20 dollars per person per day are considered poor. Bhalla estimates that a third of the population is poor by this standard. Perhaps, in light of the new World Bank definition, the nation should think again about what poverty means.

In addition to poverty, inequality is also important. The multinational bank Credit Suisse estimates that the richest percent of the Indian population owns 58.4% of the wealth, while the wealth of the bottom 70 percent is only seven percent. This share has halved within eight years, because in 2010 it was still 13.9%. Part of the overall picture is that millions of people have escaped extreme poverty, but are still a long way from living in prosperity, while the super-rich have been able to increase their prosperity rapidly.

Economic liberalization became the political paradigm in India in the course of a financial crisis in 1991 (see E + Z / D + C e-Paper 2018/08, p. 27). Growth picked up, but social divides deepened. Satellite images used to explore inequality in India confirm this assessment. Economists claim the growth strategy has exacerbated inequality. They warn that countries that start developing with high inequality will have greater difficulty correcting this later.

In the foreseeable future, there should be no more extreme poverty in India. This is very good news. But more needs to be done.


Roli Mahajan is a freelance journalist and lives in Delhi.
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