India Is Making Dramatic Strides In Addressing Extreme Poverty - Very soon India will no longer be a “poor country" yet many issues related to poverty will remain
About The World Poverty Clock
- The World Poverty Clock (WPC) provides real-time poverty estimates until 2030 for (almost) every country in the world.
- It uses publicly available data on income distribution, production and consumption and bridges the common decadal gaps between large-scale surveys and censuses.
- WPC is a systematic and consistent analytical framework to measure progress towards SDGs.
- According to the WPC, 8% of the world, or nearly 600 million people, lives in extreme poverty.
- While 23,000 people escape poverty each day, about 7,000 are falling back into extreme poverty.
- In 2015, the global “hot-spots" for extreme poverty were India, Nigeria, Democratic Republic of Congo, Ethiopia and Bangladesh, with nearly half of the world’s extreme poor.
- For the last quarter century, the percentage of the world’s population living below the extreme poverty line has reduced from 36% to 10% in 2015(from 1.9 billionpeople to about 736 million in 2015).
Changing India’s population Structure:
- From “Pyramid” to that of “an unhealthy middle-aged man with a big head and fat belly”.
- The heavy belly and hips come from a dramatic increase in the size of the lower middle class and the big head comes from rising income inequality.
- The richest 1% of India now hold 58% of the wealth, and the richest 10% over 80%.
- This structural shift will have profound consequences for politics and economics, with an aspiring class that is very large and growing, and with abject poverty declining to a much smaller percentage of the population.
- With this structural shift, there will be specific thrust on the redistribution of wealth. An aspiring class will seek betterment in education, health, housing, skills and consumption, and not merely food and shelter.
India & Poverty Reduction
- During the last full census in 2011, India’s extreme poverty rate was reported to be 21.9%, or 265 million people.
- An average GDP growth rate of over 7% for the last 26 years has made a dramatic impact on extreme poverty in India
- Future Prospects
- The latest household survey from 2017/18 will be released this year. It will incorporate some major methodological changes in particular an adjustment for owner-occupied housing called ‘imputed rent’ and a change in “recall periods" for consumer goods that is in accordance with common international practices.
- When this data is factored in, the latest estimates will suggest that the extreme poverty number is likely to have fallen to 4% or about 50 million in 2019, and is likely to drop below 40 million by 2021.
- Critical analysis on Prospects of India becoming a Middle Income country:
- While India will soon no longer be a “poor country" in the sense of the last 70 years, many issues related to very-low income households will remain.
- Crossing a minimum income or consumption threshold does not imply that the lack of education or health will not force households back into poverty.
- It does not mean that India can stop focusing on major issues like infant mortality or maternal health.
- This shift in India’s poverty structure will necessitate two things .The state will need to develop the capacity to meet evolving public aspirations and also embrace private sector participation
- Successful features like targeted redistribution have to be refined to reduce leakages and improve direct help to marginal farmers, large sections of unemployed women, the north-eastern states and scheduled castes and tribes.
- A dramatic refocus of the government towards fewer areas like security, infrastructure, primary education and public health is required.
- The government must reduce its participation in numerous other areas from banking to consumer goods.
- In all other areas, the government should play an enabling role like providing guarantees, gap funding and actions that have a meaningful impact on the ease of conducting business.