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The World Bank's recent report indicates a monumental achievement for India in its fight against extreme poverty. Between 2011-12 and 2022-23, approximately 270 million Indians were lifted out of extreme poverty, reducing the percentage of the population living below the extreme poverty line from 27.1% to a mere 5.3%. This remarkable progress is particularly noteworthy considering the World Bank simultaneously raised the global threshold for measuring extreme poverty from $2.15 to $3 per person per day and incorporated the 2021 purchasing power parity (PPP) for calculations. The upward revision of the poverty threshold, which globally added an estimated 125 million people to the ranks of the extremely poor, makes India's success even more significant. The Indian government rightly highlighted this achievement, emphasizing that it demonstrates how 'more honest data, not diluted standards, can reveal real progress.' India's transition to a Modified Mixed Recall Period (MMRP) method from the Uniform Reference Period (URP) in its Household Consumption Expenditure Survey (HCES) is crucial for understanding the improved poverty estimates. The change to MMRP has resulted in higher measured consumption, which inherently leads to lower poverty estimations. This methodological adjustment, while contributing to the reduction in poverty figures, also necessitates careful scrutiny to ensure the accuracy and reliability of the data. Globally, the revised poverty line would have added 226 million people to the count of extremely poor. However, India’s methodology revision partially offset the increase. The World Bank raised the global extreme poverty rate for 2022 to 10.5% from the earlier estimate of 9%, increasing the number of people living below the poverty line, increasing the number of people living below the poverty line to 838 million from 713 million. It is important to understand the context of these changes. The PPP is a measurement that attempts to equalize the purchasing power of different currencies, allowing for a more accurate comparison of living standards across countries. When the PPP is updated, it can have a significant impact on poverty estimates, as it changes the amount of local currency considered equivalent to the international poverty line. The adoption of the 2021 PPP implies a more realistic assessment of the cost of basic necessities in India, further solidifying the credibility of the poverty reduction figures. The fact that India managed to decrease poverty even when measured against a more stringent international standard is a testament to the effectiveness of its poverty alleviation programs and economic policies.
A key factor in India's success has been the implementation of targeted poverty reduction programs. Initiatives like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), which provides guaranteed wage employment to rural households, have played a vital role in boosting rural incomes and reducing poverty. The National Food Security Act (NFSA), which provides subsidized food grains to a large segment of the population, has also been crucial in ensuring food security and preventing people from falling into extreme poverty. Furthermore, various social welfare schemes targeted at vulnerable groups, such as women, children, and the elderly, have contributed to overall poverty reduction. These programs, coupled with broader economic growth and development initiatives, have created a conducive environment for poverty alleviation. The government's emphasis on infrastructure development, particularly in rural areas, has also played a crucial role. Improved infrastructure, such as roads, irrigation systems, and electricity supply, has facilitated economic activity and created employment opportunities, thereby contributing to poverty reduction. The government's focus on financial inclusion, through initiatives like the Pradhan Mantri Jan Dhan Yojana (PMJDY), has also been instrumental in bringing more people into the formal banking system and providing them access to financial services. These financial services, such as credit and insurance, can help people manage risks and improve their economic well-being. India’s focus on skill development through programs like Skill India Mission has equipped many individuals with the skills and expertise needed to secure better employment opportunities. This focus has directly contributed to increased incomes and the alleviation of poverty. The Pradhan Mantri Awas Yojana (PMAY) and other housing programs have also contributed to improved living conditions and reduced poverty. By providing affordable housing options, the government has helped to improve the quality of life for millions of Indians and reduce their vulnerability to economic shocks. The Swachh Bharat Mission, focused on improving sanitation and hygiene, has also indirectly contributed to poverty reduction by reducing the incidence of diseases and improving public health. A healthier population is a more productive population, and improved health outcomes can lead to increased incomes and reduced poverty.
However, it is crucial to acknowledge the challenges that remain. Despite the significant progress, 75.2 million people in India still live in extreme poverty, representing a substantial number of individuals who require continued support and assistance. Moreover, poverty reduction has not been uniform across all regions of India, with some states and districts lagging behind others. Addressing regional disparities in poverty reduction requires a more targeted and nuanced approach, taking into account the specific challenges and opportunities in each region. Further, India's methodology transition has introduced some complexities that need careful examination. While the use of MMRP is considered more accurate by many, it also makes it more difficult to compare poverty estimates over time. It is vital to understand and account for the effects of these methodological changes to ensure meaningful trend analysis and assess the true extent of poverty reduction. The HCES 2023-24 data also indicates a narrowing of spending inequality across India, highlighting a positive trend in income distribution. This suggests that the benefits of economic growth are increasingly reaching the poorer sections of society. In rural areas, the average monthly per capita consumption expenditure increased. This is a further indication of improved living standards and economic well-being in rural India. This data reinforces the positive narrative of progress in poverty reduction. The government's emphasis on evidence-based governance, sustained reforms, and methodological integrity is commendable and sets a precedent for other developing countries. By prioritizing data-driven decision-making and continuously refining its methodologies, India can ensure that its poverty reduction efforts are effective and sustainable. Moving forward, it is essential for India to continue investing in social welfare programs, promoting inclusive economic growth, and addressing regional disparities to further reduce poverty and improve the lives of its citizens. India's experience offers valuable lessons for other developing countries striving to eradicate poverty and achieve sustainable development goals. Continued efforts should focus on boosting income through education, skill enhancement, and employment creation in key sectors such as agriculture and manufacturing. Sustainable poverty reduction will depend on fostering a stable political and economic environment that attracts investment and generates opportunities for all segments of society.
Source: 270 million Indians out of extreme poverty list: World Bank