Economy

How India remains poor: ‘It will take 7 generations for India’s poor to reach mean income’

World Economic Forum’s latest report says social inequality negates gains from high economic growth

 
By Richard Mahapatra
Published: Tuesday 21 January 2020
Poverty. Photo: Down To Earth

Why does India remain persistently poor — especially specific group of its population?. A new study from the World Economic Forum (WEF) has added another dimension to the debate: India’s social inequality keeps a significant section of the population poor forever despite the country’s impressive economic growth.

WEF on January 19, 2020 released the Global Social Mobility Report 2020: Equality, Opportunity and a New Economic Imperative. It is currently holding its annual meeting, coinciding with its 50th anniversary, in Davos, Switzerland.

According to the report, Indians born in low-income family would take seven generations to even approach the country’s mean income.

Some 220 million Indians sustained on an expenditure level of less than Rs 32 / day — the poverty line for rural India — going by the last headcount of the poor in India in 2013.

India’s per capita income was pegged at Rs 1,12,835 by the National Statistical Office in its recent advance estimate for fiscal 2019-20. It is a crude indicator of the country’s well being.

The Global Social Mobility Index assessed 82 countries / economies on five key indicators:

  • Health
  • Access to and quality of education
  • Technology
  • Work opportunities, wages and conditions
  • Coverage of social protection and inclusive institutions

The Index defines social mobility as “the movement in personal circumstances either ‘upwards’ or ‘downwards’ of an individual in relation to those of their parents.” Practically, it means whether a child leads a better than her / his parents.

Another layer ‘relative social mobility’ — investigating the impact of one’s socio-economic background on her / his life — was added to the index.

India placed 76th among the 82 countries / economies. “Despite a significant decrease in the percentage of people living in absolute poverty, there are several areas for improvement for India to provide more equally shared opportunity to its population,” said the report.

One of the key findings of the study is a reiteration of what have been debated for long: Born poor invariably leads to longer poverty stints.

“Across economies, children born in less affluent families tend to experience greater barriers to success than those born in more affluent families,” the report claimed. This has arguably led to the much debated perpetuating income inequality in the world.

The study’s findings made it clear that countries with high social mobility score have lower income inequality. The opposite was also visible: “Countries with low relative social mobility —such as China or Brazil — also exhibit high levels of economic inequality,” according to the index.

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