Just how poor is India? 10 per cent, says the World Bank

India has not declared its poverty figures since 2011; the NSSO was about to release a survey in 2017-18, but the government stopped its publication

By Richard Mahapatra
Published: Tuesday 04 October 2022
Photo: iStock

A new global poverty line has been adopted from mid-September, with the World Bank updating data on its Poverty and Inequality Platform. This new estimate comes after the inclusion of India’s updated poverty data, which has been missing for over a decade. And it not only makes a difference to the global poverty level but also, for the first time since 2011, informs Indians about how poor the country is.

The updated poverty line of $2.15 per day shows that 10 per cent of people in the country were poor in 2019, down from 22.5 per cent in 2011. Rural India had more poor people (11.9 per cent) than urban areas (6.4 per cent).

Titled Poverty in India has declined over the last decade but not as much as previously thought, the estimate was made by Sutirtha Sinha Roy and Roy van der Weide and published as a World Bank Policy Research Working Paper.

“Extreme poverty is 12.3 percentage points lower in 2019 than in 2011, with greater poverty reductions in rural areas,” says the estimate. It finds that the poverty level was “considerably higher” than earlier projected by other agencies, based on consumption figures in India’s national accounts. However, “consumption inequality in India has moderated since 2011,” it says.

India has not declared its poverty figures since 2011, measured on the basis of consumer expenditure surveys by the National Sample Survey Organisation (NSSO). The agency was about to release one such survey in 2017-18, but the government stopped its publication.

The survey data leaked to the media showed that poverty had increased in India. Without official data on poverty in a country hosting the largest number of poor in the world, agencies were not able to make an exact estimate of global poverty, whose eradication is the Sustainable Development Goal 1 to be achieved by 2030.

The World Bank, in its latest update, has used consumption surveys, called Consumer Pyramid Household Surveys, released by private data company Centre for Monitoring of Indian Economy (CMIE).

The CMIE has been conducting these surveys every fourth month since January 2014 with a sample size of 174,000 households in 28 states. The latest poverty figure based on these surveys is from 2019, the year before the pandemic struck.

The Bank’s analysis says that in rural India, poverty has reduced more during 2011-19 than in urban areas — it dropped by 14.7 per cent in rural areas and 7.9 per cent in urban areas. It notes a sudden surge in urban poverty in 2016, some 2 percentage points over the preceding year. This has been attributed to demonetisation.

On the trend of poverty reduction since 2011, the estimate says, “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.”

In 2004-11, the poverty reduction rate was 2.5 percentage points annually. This dropped to 1.3 percentage points in 2011-18. “The fastest poverty reduction occurred in the years 2017 and 2018. Thereafter, the rate of poverty reduction stalled considerably,” says the World Bank estimate.

With the addition of India’s new poverty data to the global system, the number of poor has increased. “The global poverty headcount in 2018 is revised slightly up from 8.7 to 8.9 per cent,” says the World Bank, adding, “The 2017 PPPs (purchasing power parities) by themselves reduce global poverty, which is more than offset by the new estimates for India that increase global poverty.”

With this, the poverty rate and number of poor in South Asia also increases.

This was first published in the 1-15 October, 2022 edition of Down To Earth

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