Poverty Eradication – Definition, Debates, etc.

Poverty Eradication – Definition, Debates, etc.

The extent of poverty


From UPSC perspective, the following things are important :

Prelims level : Poverty line

Mains level : Paper 3- Estimating poverty in India


There has been an uproar about the working papers of the IMF and World Bank, reporting no or low poverty for India in the pandemic year or just before that.

About the IMF paper

  • The paper by Roy and Weide (2022) for the World Bank explores the possibility of using CMIE (unemployment data) in poverty calculations after correcting for the unrepresentative character of its panel data by modifying the weightages of households for aggregation.
  • These adjustments carried out to remove the non-convergence of the CMIE data with other macro statistics have resulted in a poverty figure of 12 per cent.

What does the poverty index measure or attempt to capture?

  • Its construction involves complex calculations — to identify a poverty basket of consumption, working out price indices for updation of the poverty line and then applying it to the income or consumption of households for determining their poverty status.
  • Absence of consumption expenditure: The computation becomes far more challenging in the absence of data on consumption expenditure as is the case in India and several developing countries.
  • Intending to provide inputs for policy making, researchers have evolved ingenious methods of estimating the data, using past datasets and those that have not been designed to get robust expenditure estimates.

Background of poverty line in India

  • A nine-member working group set up by the Planning Commission proposed the poverty line at Rs 20 per capita per month in the early Sixties, loosely ensuring the adequacy of minimum requirements.
  • Poverty line based on calorie needs: Dandekar and Rath (1970) went into detail about minimum calorie needs, based on the average consumption pattern.
  • Issues with calorie based poverty line: During the Eighties and Nineties, it was realised that this linkage is getting blurred due to changes in the consumption pattern, microenvironment for living, etc.
  • Sukhatme argued that the emphasis on calories and nutrition is misplaced as the absorption of nutrients depends on physical health, particularly the presence or absence of gastrointestinal diseases.
  • Water and sanitation facilities were noted as important in determining the poverty line.
  •  It was accepted that the state, through poverty interventions, cannot and should not try to guarantee adequate nutrition to people.
  • Delinking the nutritional norms: The Tendulkar Committee formally announced delinking of nutritional norms from poverty in 2010.

Extrapolating the consumption expenditure on NSS 2011-12

  • Bhalla, Virmani and Bhasin (2022) in their IMF Working Paper have developed a method of interpolation and extrapolation of the consumption expenditure of the NSS 2011-12 and building a series up to 2019-20.
  • They use the growth rate of private final consumption expenditure (PFCE) but bring in the distributional changes by allowing household consumption to grow as per the nominal per capita income in each state.
  • Takes into account rural-urban price difference: Rural-urban price differences are also introduced through separate poverty lines.
  • The method is reasonable except that it assumes the distributions to remain unchanged both within the rural and urban segments in each state over 2014-20.
  • Also, the growth rates of different commodities in the PFCE are significantly different and hence commodity-wise adjustments can be done to give higher weights to the items of consumption by the poor.
  • Taking into account the role of state: The most significant contribution of the study is its bringing in the differential engagement of the state in the provisioning of the essentials to the poor into poverty calculations.
  • This opens up the possibility of changes in the level of state engagement in poverty estimation, including free gas cylinders, etc.


People find the World Bank paper figures pegged at 12% more acceptable not because of the methodology but the magnitude. One does not know whether the poverty estimate would be a bit higher had the adjustments been carried out for a few other parameters and also at the state level.

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Poverty Eradication – Definition, Debates, etc.

The uneven toll of inflation


From UPSC perspective, the following things are important :

Prelims level : Long term capital gain

Mains level : Paper 3- Rising inequality in India


This upsurge of inflation is affecting the poor more than any other social group because some of the commodities whose prices are increasing the most (like petrol and certain food items) represent a larger fraction of the budget of the most vulnerable sections of society.

Factors fueling inflation in India

  • The Wholesale Price Index (WPI) and the Consumer Price Index (CPI) show an upward rising trend, annually, at 13.11 per cent and 6.07 per cent respectively.
  • Falling rupee: Inflation is here to stay because it has much to do with the decline in value of the rupee that has fallen to its lowest, which makes imports of oil and gas more expensive.
  • Ukraine crisis: The war in Ukraine has the same effect and pushes the price of some food items upward.

Rising inequality

  • Impact on the poor: This upsurge of inflation is affecting the poor more because some of the commodities whose prices are increasing the most represent a larger fraction of the budget of the most vulnerable sections of society.
  • Rising inequality: As a result, inequalities — which were already on the rise — are increasing further.
  • Recently, the State of Inequality in India report showed that an Indian making Rs 3 lakh a year belonged to the top 10 per cent of the country’s wage earners. 
  •  Inequalities are also increasing among salaried people, who are privileged compared to those of the informal sector: The bottom 50 per cent account for only 22 per cent of the total salary income.
  • The situation of the lower-middle class and poor is deteriorating.
  • The Reserve Bank of India shows slow farm wage growth in nominal terms: From an average of 6.6 per cent in fiscal 2021 to 5.7 per cent in fiscal 2022 (April-November average). This is below the inflation rate.

Inequality in healthcare

  • India’s spending on healthcare is among the lowest in the world.
  • A decent level of healthcare is available only to the ones who can afford it because of increasing out-of-pocket expenditure — the payment made directly by individuals for the health service, not covered under any financial protection scheme.
  •  Overall, these out-of-pocket expenses on healthcare are 60 per cent of the total expenditure on public health in India, which is one of the highest in the world.

How policies are contributing to the increasing inequality?

  • High indirect taxes: The share of indirect taxes in the state’s fiscal resources has increased from 2014 to 2019 to reach 50 per cent of the total taxes in 2019.
  • Higher indirect taxes are the most unfair as it affects everyone, irrespective of their income.
  • Taxes on alcohol and petroleum products are cases in point.
  • In contrast, the big companies are flourishing, again, partly because of certain fiscal policies. 
  • Low corporate taxes: The government’s budget in 2015 substantially lowered the corporate tax.
  • Withdrawal of enhanced surcharge: In addition to these tax cuts, the government withdrew the enhanced surcharge on long- and short-term capital gains for foreign portfolio investors (FPIs) as well as domestic portfolio investors.
  • These government policies are clearly promoting the supply side at the expense of demand.
  • The central bank has raised interest rates and CRR in an attempt to curb demand, but demand in the country is already choking.

Way forward

  • Higher allocation for MGNREGA: A higher allocation of funds for MGNREGS in rural areas, as well as the introduction of similar employment generation schemes in urban areas, should, therefore, be a priority.
  • Municipal bonds at state level: At the state level, the development of municipal bond markets could be a plausible alternative.
  • Reduction on excise duty on fuel: A reduction in the excise duty on fuel prices and easing the fuel tax burden could also supplement the disposable income and reduce the input cost burden for producers.


Though the government is opting for market-based economics, currently, India needs a mixed solution that comprises price stability via government channels and subsidies.

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Back2Basics: Long and short-term capital gain

  • When you buy and sell assets, the profit that you earn is called a Capital Gain.
  • Long Term Capital Gains are those that you earn when you sell an asset after 36 months (3 years) from the date on which you acquired the asset.
  • Short Term Capital Gains are those that you earn when you sell an asset in under 36 months (3 years) from the date on which you acquired the asset.

Poverty Eradication – Definition, Debates, etc.

Extreme Poverty down in India


From UPSC perspective, the following things are important :

Prelims level : Poverty in India

Mains level : Paper 2- Poverty reduction in India


A recent World Bank Report has shown that extreme poverty in India more than halved between 2011 and 2019 – from 22.5 per cent to 10.2 per cent.  The reduction was higher in rural areas, from 26.3 per cent to 11.6 per cent.

What explains the reduction in poverty?

  • Poverty has reduced significantly because of the government’s thrust on improving the ease of living of ordinary Indians through schemes.
  • These schemes include the Ujjwala Yojana, PM Awas Yojana, Swachh Bharat Mission, Jan Dhan and Mission Indradhanush in addition to the Deendayal Antyodaya Yojana-National Rural Livelihood Mission and improved coverage under the National Food Security Act.
  • It is important to understand how poverty in rural areas was reduced at a faster pace.
  • Much of the success can be credited to all government departments, especially their janbhagidari-based thrust on pro-poor public welfare.

Contributing factors

1] Identification of beneficiaries through SECC 2011

  • The identification of deprived households on the basis of the Socioeconomic and Caste Census (SECC) 2011 across welfare programmes helped in creating a constituency for the well-being of the poor, irrespective of caste, creed or religion.
  • Deprivation criterion: Since deprivation was the key criterion in identifying beneficiaries, SC and ST communities got higher coverage and the erstwhile backward regions in Bihar, Madhya Pradesh, Rajasthan, Uttar Pradesh, Jharkhand, Odisha, Chhattisgarh, Assam, Rajasthan and rural Maharashtra got a larger share of the benefits.
  • Gram Sabha Validation: Social groups that often used to be left out of government programmes were included and gram sabha validation was taken to ensure that the project reached these groups.

2] Widened coverage of women

  • The coverage of women under the Deendayal Antyodaya Yojana and Self Help Groups (SHG) increased from 2.5 crore in 2014 to over 8 crore in 2018 as a result of more than 75 lakh SHGs working closely with over 31 lakh elected panchayati raj representatives, 40 per cent of whom are women.
  • This provided a robust framework to connect with communities and created a social capital that helped every programme.
  • The PRI-SHG partnership catalysed changes that increased the pace of poverty reduction and the use of Aadhaar cleaned up corruption at several levels and ensured that the funds reached those whom it was meant for.

3] Creation of basic infrastructure

  • Finance Commission transfers were made directly to gram panchayats leading to the creation of basic infrastructure like pucca village roads and drains at a much faster pace in rural areas.
  • The high speed of road construction under the Pradhan Mantri Gram Sadhak Yojana created greater opportunities for employment in nearby larger villages/census towns/kasbas by improving connectivity and enhancing mobility.

4] Availability of credit through SHGs

  • The social capital of SHGs ensured the availability of credit through banks, micro-finance institutions and MUDRA loans.
  • Livelihood diversification: The NRLM prioritised livelihood diversification and implemented detailed plans for credit disbursement.

5]  Implementation of social sector schemes

  • In the two phases of the Gram Swaraj Abhiyan in 2018, benefits such as gas and electricity connections, LED bulbs, accident insurance, life insurance, bank accounts and immunisation were provided to 63974 villages that were selected because of their high SC and ST populations.
  • The performance of line departments went up manifold due to community-led action.
  • The gains are reflected in the findings of the National Family Health Survey V, 2019-2021.

6] Universal coverage schemes

  • The thrust on universal coverage for individual household latrines, LPG connections and pucca houses for those who lived in kuccha houses ensured that no one was left behind. This created the Labarthi Varg.

7] Increase in fund transfer to rural area

  • Seventh, this was also a period in which a high amount of public funds were transferred to rural areas, including from the share of states and, in some programmes, through extra-budgetary resources.

8] Community participation

  • The thrust on a people’s plan campaign, “Sabki Yojana Sabka Vikas” for preparing the Gram Panchayat Development Plans and for ranking villages and panchayats on human development, economic activity and infrastructure, from 2017-18 onwards, laid the foundation for robust community participation involving panchayats and SHGs, especially in ensuring accountability.

9] Social and concurrent audit

  • Through processes like social and concurrent audits, efforts were made to ensure that resources were fully utilised.
  • Several changes were brought about in programmes like the MGNREGS to create durable and productive assets.

10] Focus of states on improving livelihood diversification

  • The competition among states to improve performance on rural development helped.
  • Irrespective of the party in power, nearly all states and UTs focussed on improving livelihood diversification in rural areas and on improving infrastructure significantly.


All these factors contributed to improved ease of living of deprived households and improving their asset base. A lot has been achieved, much remains to be done.

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Poverty Eradication – Definition, Debates, etc.

‘Mission Antyodaya’ can help transform rural India


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Importance of Mission Antyodaya


This article argues that given the right momentum, the ‘Mission Antyodaya’ project bears great promise to eradicate poverty in its multiple dimensions among rural households.

Background of Mission Antyodaya

  • The ‘Mission Antyodaya’ project was launched by the Government of India in 2017-18.
  • The Ministry of Panchayati Raj and the Ministry of Rural Development act as the nodal agents to take the mission forward.
  • Key goals: The main objective of ‘Mission Antyodaya’ is to ensure optimum use of resources through the convergence of various schemes that address multiple deprivations of poverty, making gram panchayat the hub of a development plan.
  • Annual survey: This planning process is supported by an annual survey that helps to assess the various development gaps at the gram panchayat level, by collecting data regarding the 29 subjects assigned to panchayats by the Eleventh Schedule of the Constitution.
  • Also, data regarding health and nutrition, social security, good governance, water management and so on are also collected.
  • The idea of the Ministry of Panchayati Raj to identify the gaps in basic needs at the local level, and integrating resources of various schemes, self-help groups, voluntary organisations and so on to finance them needs coordination and capacity-building of a high order.
  • If pursued in a genuine manner, this can foster economic development and inter-jurisdictional equity.

Infrastructural gaps as pointed out by the Mission Antyodaya Survey

  • The ‘Mission Antyodaya’ survey in 2019-20 for the first time collected data that shed light on the infrastructural gaps from 2.67 lakh gram panchayats, comprising 6.48 lakh villages with 1.03 billion population.
  • The maximum score values assigned will add up to 100 and are presented in class intervals of 10.
  • While no State in India falls in the top score bracket of 90 to 100, 1,484 gram panchayats fall in the bottom bracket.
  • Even in the score range of 80 to 90, 10 States and all Union Territories do not appear.
  • The total number of gram panchayats for all the 18 States that have reported adds up only to 260, constituting only 0.10% of the total 2,67,466 gram panchayats in the country.
  •  If we consider a score range of 70-80 as a respectable attainment level, Kerala tops but accounts for only 34.69% of gram panchayats of the State, the corresponding all-India average is as low as 1.09%.
  • The composite index data, a sort of surrogate for human development, are also not encouraging.
  • Although only 15 gram panchayats in the country fall in the bottom range below 10 scores, more than a fifth of gram panchayats in India are below the 40 range.
  • The gap report and the composite index show in unmistakable terms that building ‘economic development and social justice’ remains a distant goal even after 30 years of the decentralisation reforms and nearly 75 years into Independence.

Way forward

  • Converge resources: Given the ‘saturation approach’ (100% targets on select items) of the Ministry of Panchayati Raj, the possibilities of realising universal primary health care, literacy, drinking water supply and the like are also immense.
  • But there is no serious effort to converge resources (the Mahatma Gandhi National Rural Employment Guarantee Act, the National Rural Livelihood Mission, National Social Assistance Programme, Pradhan Mantri Awas Yojana, etc.) and save administrative expenses.
  • Deploy the data to India’s fiscal federalism: Another lapse is the failure to deploy the data to India’s fiscal federalism, particularly to improve the transfer system and horizontal equity in the delivery of public goods in India at the sub-State level.
  • The constitutional goal of planning and implementing economic development and social justice can be achieved only through strong policy interventions.


The policy history of India has been witness to the phenomenon of announcing big projects and failing to take them to their logical consequence. ‘Mission Antyodaya’ is a striking case in recent times.

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Poverty Eradication – Definition, Debates, etc.

World Inequality Report, 2022


From UPSC perspective, the following things are important :

Prelims level : World Inequality Report

Mains level : Rich vr Poor divide in India

As per the ‘World Inequality Report 2022’, India is among the most unequal countries in the world, with rising poverty and an ‘affluent elite.’

World Inequality Report

  • This report is published by Mr. Lucas Chancel, the co-director of the World Inequality Lab of the Paris School of Economics.
  • It was coordinated by famed French economist Thomas Piketty.

Key highlights of the report

(1) Income divide

  • The report highlights that the top 10% and top 1% in India hold 57% and 22% of the total national income respectively while the bottom 50% share has gone down to 13%.
  • The average national income of the Indian adult population is Rs 2,04,200.
  • The bottom 50% earns 20 times more than the top 10%.

 (2) Decline in public wealth

  • The report notes that the share of public wealth across countries has been on a decline for decades now.
  • Public assets typically include public buildings housing administrations, schools, universities, hospitals, and other public services.

(3) Inequality during Colonial India

  • Going back in time, the report shows that the income inequality in India under the British colonial rule (1858-1947) was very high, with a top 10% income share around 50%.
  • After independence, due to socialist-inspired five-year plans, this share was reduced to 35-40%.
  • Owing to poor post-Independence economic conditions, India embarked upon deregulation and loosening controls in the form of liberalization policies.

(4) Wealth inequality

  • The average household wealth in India is around Rs 9,83,010.
  • The bottom 50% of the nation can be seen to own almost nothing, with an average wealth of Rs 66,280 or 6% of the total pie.
  • The middle class is relatively poor with an average wealth of Rs 7,23,930 or 29.5% of the total.
  • The top 10% owns 65% of the total wealth, averaging Rs 63,54,070 and the top 1% owns 33%, averaging Rs 3,24,49,360.

(5) Gender Inequality

  • Gender inequality in India is also considered on the higher end of the spectrum.
  • The share of female labor income share in India is equal to 18% which is significantly lower than the average in Asia (21%, excluding China) & is among the lowest in the world.
  • Although, the number is slightly higher than the average share in the Middle East (15%).
  • However, a significant increase has been observed since 1990 (+8 p.p.) but it has been insufficient to lift women’s labor income share to the regional average.

(6) Poor States, wealthy population

  • Countries across the world have become richer over the past 40 years, but their governments have become significantly poorer.
  • The report shows that the share of wealth held by public actors is close to zero or negative in rich countries, meaning that the totality of wealth is in private hands.
  • Following the pandemic, governments borrowed the equivalent of 10-20% of GDP, essentially from the private sector.

(7) Issue over data availability

  • The report goes on to say that over the past three years, the quality of inequality data released by the government has seriously deteriorated.
  • This has made it particularly difficult to assess recent inequality changes.

Conclusions from the report

(1) Wealth is mostly inherited and has a snowball effect

  • People accumulate wealth across generations through inheritance.
  • It has a snowball effect, wherein successive generations will gain more, but in their concentrated section.
  • More capital incentivizes banks to lend. This is why the rich section’s wealth grows faster.

(2) Wealth management is necessary

  • Public wealth has been declining for two reasons:
  1. First, governments have been privatizing assets and natural resources at low costs.
  2. Second, governments contract debt to the private sector, making it richer.
  • Without assets, governments have low resources to invest and to mitigate climate change impacts, particularly in the energy sector.
  • Currently, governments have more debts than assets. This calls for strategic management of the economy.


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Poverty Eradication – Definition, Debates, etc.

What the NFHS data reveals about inequality in India


From UPSC perspective, the following things are important :

Prelims level : Gini

Mains level : Paper 2- Analysing NHFS-5 data


The release of the NFHS data (and the Niti Aayog’s study on developing a multi-dimensional index of poverty — MPI) has led to a considerable amount of discussion, and justifiably so.

Understanding the progress and development: MPI

  • The MPI is an Oxford-based initiative that develops an exclusive broadly non-monetary living standard index of poverty.
  • MPI indices are the third in the series of global studies on poverty.
  • Global studies on poverty: Global studies started with the World Bank’s income/consumption-based measure of absolute poverty.
  • The UN expanded the monetary index adding health and education indicators via the Human Development Index (HDI).

Evolution of poverty over time

  • Like with the other poverty indices (World Bank and HDI), most information and useful policy analysis comes via a study of the inter-temporal evolution of poverty. 
  • Regional inequality: Ajit Ranade acknowledges that regional inequality has existed for some time, but he argues that poverty incidence across Indian states even as per the MPI is astoundingly unequal.
  • T N Ninan talks about the simultaneous existence of Africa’s Sahel region and the Philippines in India.
  • He finds that the two Indias are not getting any closer.
  • Indeed, India’s development trajectory has not been uniform, but the regional imbalance of development cannot be viewed at a fixed point in time.

Analysing the NHFS data

  • A detailed examination of the summary statistics reported in the NFHS data (large and small states of India for the two years 2015-16 and 2019-21), reveals the opposite result.
  • Convergence: The analysis reveals remarkable convergence in living standards, a convergence possibly unparalleled in Indian history and in the space of just five years.
  • NFHS reports the averages for all states, and for 131 variables, for two years 2015-16 and 2020-21.
  • Seventeen of these 131 welfare indicators are used to construct indices under four classifications.
  • Improvement in lives of girls/women: The first classification concerns itself with the improvement in the lives of girls/women (five indicators, for example, sex ratio, fertility, female education).
  • Housing conditions: The second bucket consists of housing conditions (three indicators, for example, improved sanitation, clean fuel).
  • Children’s welfare: The third list consists of children’s welfare (four indicators such as adequate diet, stunting)
  • Women’s welfare: The fourth classification includes women’s empowerment (five indicators, for example, owning a house, less spousal violence).
  • Given that Niti Aayog’s report primarily relies on the NFHS-4, these findings can be used as the baseline scenario to evaluate the delta — that is, the per cent change in indicators between NFHS-4 and NFHS-5.
  • The table reports the results for several states.

  • Seventeen indicators imply a maximum possible score of 1,700.
  • Kerala performs the best with an aggregate index of 1,300 in NFHS-5 — a very small 1.5 per cent increase from its 2015-16 value.
  • In contrast, Bihar increases its index by 56 per cent.
  • Punjab does better than Tamil Nadu and today has a higher index – 1,240 versus 1,178 in 2020-21.
  • UP (along with Rajasthan and MP) performs the best — a 60 plus per cent increase in the welfare index, more than five times the increase in the rich states.

Major findings from the NHFS data

  • Convergence: Higher improvement by less developed states is evidence in support of catch-up, which suggests that regional imbalances are reducing, and in some indicators, rapidly so.
  • States such as UP, Bihar and Jharkhand are fast approaching similar standards for select indicators as some of the “developed” states.
  • Result of targeted intervention: This acceleration in catch up is no coincidence, but rather an outcome of an approach that involves targeted interventions to improve developmental outcomes.
  • The approach was not just limited to sanitation, proper fuel or electricity — interventions that are targeted to an individual household — but also to the holistic development of an entire region.

Consider the question “What does NHFS-5 data reveal about the inequality in India?”


India has been, and was, not one but several Indias. What is remarkable about its recent history is the rapid process of uneven change — where progress is considerably higher for the poorer states — the convergent, and inclusive pattern of development. That is the real story behind the NFHS-4 and NFHS-5 numbers.

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Poverty Eradication – Definition, Debates, etc.

NITI Aayog’s Multidimensional Poverty Index (MPI)


From UPSC perspective, the following things are important :

Prelims level : NMPI

Mains level : Multidimensional Poverty in India

The Government think-tank NITI Aayog has released the National Multidimensional Poverty Index (MPI).

Multidimensional Poverty Index (MPI)

  • This baseline report of India’s first-ever national MPI measure is based on the reference period of 2015-16 of the National Family Health Survey (NFHS)- 4.
  • It uses the globally accepted and robust methodology developed by the Oxford Poverty and Human Development Initiative (OPHI) and the United Nations Development Programme (UNDP).
  • It captures multiple and simultaneous deprivations faced by households.

Parameters used

  • The NMPI is calculated using 12 indicators — nutrition, child and adolescent mortality, antenatal care, years of schooling, school attendance, cooking fuel, sanitation, drinking water, electricity, housing, assets and bank account,
  • They have been grouped under three dimensions namely, health, education and standard of living.

Why NFHS-4?

  • Data collected during the NFHS-4 (2015-2016) corresponds to the period before the full roll out of new governments’ flagship schemes.
  • Hence it serves as a useful source for measuring the situation at baseline i.e. before large-scale rollout of nationally important schemes.

How is the data used?

  • The national MPI 2021 is calculated using the household microdata collected at the unit-level for the NFHS-4 that is used to derive the baseline multidimensional poverty.
  • Further, the country’s progress would be measured using this baseline in the NFHS-5, for which the data was collected between 2019 and 2020.
  • The progress of the country with respect to this baseline will be measured using the NFHS-5 data collected in 2019-20.

Key highlights NMPI

  • As per the index, 51.91% of the population in Bihar is poor, followed by Jharkhand (42.16%), Uttar Pradesh (37.79%), Madhya Pradesh (36.65%) and Meghalaya (32.67%).
  • On the other hand, Kerala registered lowest population poverty levels (0.71%), followed by Puducherry (1.72%), Lakshadweep (1.82%), Goa (3.76%) and Sikkim (3.82%).
  • Other States and UTs where less than 10% of the population are poor include Tamil Nadu (4.89%), Andaman & Nicobar Islands (4.30%), Delhi (4.79%), Punjab (5.59%), Himachal Pradesh (7.62%) and Mizoram (9.8%).


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Poverty Eradication – Definition, Debates, etc.

A brief history of India’s Poverty Levels


From UPSC perspective, the following things are important :

Prelims level : Poverty estimates in India

Mains level : Poverty in India

Poverty in India had increased between 2012 and 2020.

What is Poverty?

  • Fundamentally, the concept of poverty is associated with socially perceived deprivation with respect to basic human needs (Tendulkar, 2009).
  • This is a crucial definition to consider since the Tendulkar committee’s estimation method is the last officially recognized method for arriving at poverty numbers in India.

A relative term

  • If you think about it for a moment, poverty is a “relative” concept.
  • Poverty is essentially about how you are “relative” to those in your surroundings.
  • For example, with Rs 1,000 in your pocket, you may be “rich” if those around you have no more than Rs 100 with them.
  • But, in another setting, say around those who have no less than Rs 10,000 with them, you will come across as “poor”.
  • As such, as long as there are variations in the income and/or wealth levels in a society, there will be “poverty”.

What is abject poverty?

  • Apart from the relative nature of poverty, there is such a thing as abject poverty.
  • It typically refers to a state where a person is unable to meet its most basic needs such as eating the minimum amount of food to stay alive.

What is a Poverty Line?

  • From the point of view of policymaking, poverty levels typically refer to some level of income or expenditure below which one can reasonably argue that someone is poorer than the rest of the society.
  • The whole point of the bulk of policymaking is to improve the living standards of the poorest in the country.
  • But to design policies, one must first know what the target group is, how much does it earn (or spend, since robust data on income is not easily available).
  • This is done by choosing a “poverty line” — or a level of income or consumption expenditure that divides the population between the poor and non-poor.

Why define a Poverty Line?

The purpose behind choosing a poverty line is two-fold.

(A) To accurately design policies for the poor

  • Doing so allows you to target your policies towards the two poorest people in the country.
  • Often such policies are redistributive in nature — such as giving subsidised food grains or providing some kind of social security like MGNREGA.
  • In an ideal world a government would have the resources to help everyone in the economy but in reality, even the government’s works within some financial or budgetary constraints.

(B) To assess the success or failure of government policies over time

  • Over time the overall GDP doubles but the income of the general public falls.
  • Hence the government would know that its policies are not bearing fruit.

Poverty Estimation in India

  • Planning Commission Expert Group (1962): It formulated the separate poverty lines for rural and urban areas at ₹20 and ₹25 per capita per year respectively.
  • VM Dandekar and N Rath (1971): They made the first systematic assessment, based on National Sample Survey (NSS) data. They suggested providing 2250 calories per day in both rural and urban areas.
  • YK Alagh Committee (1979): It constructed a poverty line for rural and urban areas on the basis of nutritional requirements and related consumption expenditure.
  • Lakdawala Committee (1993): It suggested that consumption expenditure should be calculated based on calorie consumption as earlier. State specific poverty lines should be constructed. It asked for discontinuation of scaling of poverty estimates based on National Accounts Statistics.
  • Tendulkar Committee (2009): The current official measures of poverty are based on the Tendulkar poverty line, fixed at daily expenditure of ₹27.2 in rural areas and ₹33.3 in urban areas is criticised by many for being too low.

What has happened in India’s fight against poverty?

  • There are two ways to assess India’s performance.
  1. One is to look at the headcount ratio of poverty which is the percentage of India’s population that was designated to be below the poverty line
  2. The other variable to look at is the absolute number of poor people in the country
  • If one looks at the headcount ratio then India made rapid strides since 1973.
  • Even though India is home to possibly the largest number of poor people in the world, there has been no official update on India’s poverty levels since.

Who oversees the Poverty Level?

  • Poverty levels are updated by using the Consumer Expenditure Survey, which is conducted by the National Statistical Office (NSO) once every five years.
  • The last such survey was conducted in 2017-18.
  • That survey reportedly showed that for the first time in four decades consumer expenditure in India had fallen.

What are the latest findings?

  • Poverty levels, as well as the absolute number of poor, had risen between 2011-12 and 2017-18.
  • The government claimed that the survey suffered from “data quality” issues.
  • The next round of the Consumer Expenditure Survey (CES) was supposed to be conducted in 2021.

Causes of rise in Poverty

  • GDP growth decline: It is a fact that India’s GDP growth rate had registered a secular deceleration between the start of 2017 and 2020.
  • Jobless growth: The second and related factor is the unprecedented rise in joblessness.
  • Wages decline: Millions were pulled out of poverty between 2004 and 2011 due to sharp rise in non-farm employment and associated wages. But for many of those workers, real wages have either fallen or stagnated.
  • Pandemic impact: Covid induced lockdown sent millions of workers back to villages, seeking MGNREGA work at minimum wages.


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Poverty Eradication – Definition, Debates, etc.

Why counting of poor matters?


From UPSC perspective, the following things are important :

Prelims level : Poverty line

Mains level : Paper 3- Counting the number of the poor

Counting the number of the poor

  • If the state of the Indian economy is to be repaired, we need to meticulously count the number of the poor and to prioritise them.
  • The World Bank $2-a-day poverty line might be inadequate but it would be a start and higher than the last line proposed by the C. Rangarajan committee.
  • A survey in 2013 had said India stood at 99 among 131 countries, and with a median income of $616 per annum, it was the lowest among BRICS and fell in the lower-middle-income country bracket.
  • Since 2013 three important data points have made it clear that the state of India’s poor needs to be acknowledged if India is to be lifted.
  • The first being, the fall in the monthly per capita consumption expenditure of 2017-18 for the first time since 1972-73.
  • Second is the fall of India in the Global Hunger Index to ‘serious hunger’ category.
  • Third,  health census data or the recently concluded National Family Health Survey or NFHS-5, which had worrying markers of increased malnutrition, infant mortality and maternal health.
  • A fourth statistic, Bangladesh bettering India’s average income statistics, must also be a reason for Indians to introspect.

Increase in number of poor in India

  •  In 2019, the global Multidimensional Poverty Index reported that India lifted 271 million citizens out of poverty between 2006 and 2016. 
  • Since then, the International Monetary Fund, Hunger Watch, SWAN and several other surveys show a decided slide.
  • In March, the Pew Research Center with the World Bank data estimated that ‘the number of poor in India, on the basis of an income of $2 per day or less in purchasing power parity, has more than doubled to 134 million from 60 million in just a year due to the pandemic-induced recession’.
  • In 2020, India contributed 57.3% of the growth of the global poor.
  • This has thrown a spanner in the so far uninterrupted battle against poverty since the 1970s.
  • Urgent solutions are needed within, and the starting point of that would be only when we know how many are poor.

Debate on the poverty line

  • In 2011, the Suresh Tendulkar Committee report at a ‘line’ of ₹816 per capita per month for rural India and ₹1,000 per capita per month for urban India, calculated the poor at 25.7% of the population.
  • The anger over the 2011 conclusions, led to the setting up of the C. Rangarajan Committee.
  • In 2014, C. Rangarajan Committee estimated that the number of poor were 29.6%, based on persons spending below ₹47 a day in cities and ₹32 in villages.
  • The National Commission for Enterprises in the Unorganised Sector in 2004, had concluded that 836 million Indians still remained marginalised.
  • The Commission’s conclusion was ignored — that 77% of India was marginalised — emphasising that it was a problem of a much bigger magnitude, than the figure of 25.7% conveyed.

Why counting the poor matters?

1) Helps in forming public opinion

  • Knowing the numbers and making them public makes it possible to get public opinion to support massive and urgent cash transfers.
  • The world outside India has moved onto propose high fiscal support, as economic rationale and not charity.
  •  In India too, a dramatic reorientation would get support only once numbers are honestly laid out.

2) It helps in evaluating success of policies

  •  Recording the data helps to evaluate all policies on the basis of whether they meet the needs of the majority.
  • Is a policy such as bank write-offs of loans amounting to ₹1.53-lakh crore last year, which helped corporates overwhelmingly, beneficial to the vast majority?
  • This would be possible to transparently evaluate only when the numbers of the poor are known and established.

3) Helps in addressing the concerns of real majority

  • If government data were to honestly account for the exact numbers of the poor, it may be more realistic to expect the public debate to be conducted on the concerns of the real majority.
  • Such data would also help in creating a climate that demands accountability from public representatives.

4) To gauge the rising inequality

  • India has clocked a massive rise in the market capitalisation and the fortunes of the richest Indian corporates, even as millions of Indians have experienced a massive tumble into poverty.
  • To say that the stock market and the Indian economy are ‘not related’ is ingenuous.
  • Indians must have the right to question whether there is a connection and if the massive rise in riches is not coincidental, but at the back of the misery of millions of the poor.
  • If billionaire lists are evaluated in detail and reported upon, the country cannot shy away from counting its poor.


The massive slide into poverty in India that is clear in domestic and international surveys and anecdotal evidence must meet with an institutional response.

Poverty Eradication – Definition, Debates, etc.

Social sector: the post-Covid priority


From UPSC perspective, the following things are important :

Prelims level : Social sector expenditure as percentage of GDP

Mains level : Paper 2- Need to invest more in the social sector in the post pandemic world

The article highlights the need for more focus on the social sector in the post-Covid society and suggest ways to do the same.

Why focus on social sector

  • No country has progressed without investing in the social sector.
  • India is committed to achieving the Sustainable Development Goals (SDGs) by 2030, and social sector development is important in reaching them.
  • Progress in this sector has intrinsic (for its own sake) and instrumental (for higher growth) value.
  • It is needed even to build a $5 trillion economy faster.

India’s social sector expenditure

  • India’s progress in the social sector has been much slower compared to its GDP growth.
  • In the social sector expenditure, the share of education as a percentage of GDP has been stagnant around 2.8-3 per cent during 2014-15 to 2019-20.
  • In the case of health, the expenditure as a percentage of GDP increased from 1.2 per cent to 1.5 per cent.
  • This is lower than the required 2-3 per cent of GDP.
  • An increase in health expenditure is also important to take care of the present and future pandemics.
  • There are supply side problems regarding the health infrastructure.
  • It is essential to have a huge increase in public expenditure on health and provide accessible, affordable and quality health coverage to all.

Following are some key issues in the social sector India needs to focus on.

1) The problem of undernutrition

  • The NFHS-5 report shows that malnutrition level has reduced marginally in a few states and has worsened in some other states between 2015-16 and 2019-20.
  • We can’t have a society with 35 per cent of our children suffering from malnutrition.
  • Apart from undernutrition, obesity seems to be increasing in both rural and urban areas.
  • There is a need to raise allocations for ICDS and other nutrition programmes.
  • The determinants of nutrition are agriculture, health, women’s empowerment, including maternal and child practices, social protection, nutrition education, sanitation and drinking water.
  • The Poshan Abhiyan is a good programme, but has to cover all these determinants with a multi-pronged approach to reduce undernutrition.

2) Quality education

  • Quality education is key for raising human development.
  • The pandemic has enhanced inequalities in education and has revealed the widening digital gap.
  • Equality of opportunity in terms of quality education is the key for raising human development and for reducing inequalities in the labour market.
  • Several committees have recommended that public expenditure on education should be at 6 per cent of GDP.

3) Social safety nets

  •  It is known that migrant workers were the most affected during the pandemic and that they do not have any safety nets.
  • There is a need to have safety nets like an employment guarantee scheme for the urban poor and facilities for migrants.
  • Similarly in rural areas, allocations to MGNREGA have to be increased because of the reverse migration.

4) Programs for vulnerable section need to be continued

  • The government has done well in providing cooking gas through Ujjwala Yojana and electricity through Saubhagya Yojana, introducing programmes such as Swachh Bharat Abhiyan and initiatives for housing, financial inclusion and providing loans to the self-employed.
  • These programmes have helped the vulnerable sections, particularly women.
  • Another initiative of the government was to facilitate direct benefit transfers (DBT) for welfare schemes.
  • These initiatives have to be continued.

Way forward

  • The government should give more focus to the social sector with better policies and implementation.
  • It has to work closely with the states in revitalising the social sector as major expenditures particularly on health and education are met by them.
  • The 15th Finance Commission also seems to have mentioned that health expenditure should be increased to 2.1 per cent of GDP.
  • The Commission may also suggest some incentives for states to increase health expenditure.
  • Both Centre and states should have a five-year vision on the social sector.

Consider the question “No country has progressed without investing in the social sector. In the post pandemic world India needs to chart the plan to invest more in the sector. In light of this, examine the challenges in the social sector and suggest the ways to deal with them.


India, aspiring to be a global power, should have a harmonious and inclusive social sector development. This is also important for achieving the SDGs, reducing inequalities and building a $5 trillion economy faster.

Poverty Eradication – Definition, Debates, etc.

[pib] Global Indices to Drive Reforms and Growth (GIRG) Exercise


From UPSC perspective, the following things are important :

Prelims level : MPI and various other dimensions of poverty

Mains level : Not Much

NITI Aayog as the nodal agency has been assigned the responsibility of leveraging the monitoring mechanism of the Global Multidimensional Poverty Index (MPI) to drive reforms.

Try this PYQ:

Q.In a given year in India, official poverty lines are higher in some states than in others because (CSP 2019):

(a) Poverty rates vary from State to State

(b) Price levels vary from State to State

(c) Gross State Product varies from State to State

(d) Quality of public distribution varies from State to State

GIRG Exercise

  • Global MPI is part of GoI’s decision to monitor the performance of the country in 29 select Global Indices.
  • The objective of the exercise is to fulfil the need to measure and monitor India’s performance on various important social and economic parameters.
  • It would enable the utilization of these Indices as tools for self-improvement; bring about reforms in policies, while improving last-mile implementation of government schemes.
  • As the Nodal agency for the MPI, NITI Aayog has constituted a Multidimensional Poverty Index Coordination Committee (MPICC).

About Global MPI

  • Global MPI is an international measure of multidimensional poverty covering 107 developing countries.
  • It was first developed in 2010 by Oxford Poverty and Human Development Initiative (OPHI) and the UN Development Programme (UNDP) for UNDP’s Human Development Reports.
  • It is computed by scoring each surveyed household on 10 parameters based on -nutrition, child mortality, and years of schooling, school attendance, cooking fuel, sanitation, drinking water, electricity, housing and household assets.
  • It utilizes the National Family Health Survey (NFHS) which is conducted under the aegis of the Ministry of Health and Family Welfare (MoHFW) and International Institute for Population Sciences (IIPS).

Poverty Eradication – Definition, Debates, etc.

Technical Platform on the Measurement and Reduction of Food Loss and Waste


From UPSC perspective, the following things are important :

Prelims level : UNFAO

Mains level : Assurance of Food Security

The Food and Agriculture Organization (FAO) has unveiled a new platform to help accelerate the global reduction in food loss and waste.

Try this PYQ from CSP 2016:

Q. The FAO accords the status of ‘Globally Important Agricultural Heritage System (GIAHS)’ to traditional agricultural systems. What is the overall goal of this initiative?

  1. To provide modern technology, training in modern farming methods and financial support to local communities of identified GIAHS so as to greatly enhance their agricultural productivity.
  2. To identify and safeguard eco-friendly traditional farm practices and their associated landscapers, agricultural biodiversity and knowledge systems of the local communities.
  3. To provide Geographical Indication status to all the varieties of agricultural produce in such identified GIAHS.

Select the correct answer using the code given below.

(a) 1 and 3 only
(b) 2 only
(c) 2 and 3 only
(d) 1, 2 and 3

About the Platform

  • The Technical Platform on the Measurement and Reduction of Food Loss and Waste brings together information on measurement, reduction, policies, alliances, actions and examples of successful models applied to reduce food loss and waste across the globe.
  • The platform will contain information on measurement, reduction policies, alliances, actions and examples of successful models applied to reduce food loss and waste.
  • The platform will be officially launched on the first International Day of Awareness of Food Loss and Waste on 29 September 2020.

How will it work?

  • The platform is as a gateway to information on food loss and waste from various resources, including the largest online collection of data on what food is lost and wasted.
  • Links to related portals from development partners are also provided.

Why need such a portal?

  • Food loss and waste is a sign of food systems in distress. Nutritious foods are the most perishable, and hence, the most vulnerable to lose.
  • Not only food is being lost, but food safety and nutrition are being compromised as well.
  • At least 14 per cent of food is lost (food wastage and food loss together), valued at $400 billion annually.
  • In terms of greenhouse gas emissions, the food that is lost is associated with around 1.5 gigatonnes of carbon dioxide equivalent.
  • Major losses are seen in roots tubers and oil-bearing crops (25 per cent), fruits and vegetables (22 per cent), and meat and animal products (12 per cent).
  • Reducing food loss and waste can bring about many benefits: more food available for the most vulnerable; a reduction in greenhouse gas emissions; less pressure on land and water resources; and increased productivity and economic growth.

Food loss vs food wastage

  • There is a difference between food wastage and food losses.
  • Food is wasted when it is discarded by consumers or is disposed of in retail due to its inability to meet quality standards.
  • Food loss, on the other hand, occurs when it is spoilt or spilt before reaching the final product or retail stage.
  • For example, dairy, meat, and fish can go bad in transit because of inadequate refrigerated transport and cold storage facilities.

Back2Basics: Food and Agriculture Organisation (FAO)

Objective: Lead international efforts to defeat hunger

Members: FAO has 194 Member Nations, two associate members and one member organization, the European Union

Headquarters: Rome, Italy

Year Founded: Established in 1945

Poverty Eradication – Definition, Debates, etc.

Poverty and its measurement


From UPSC perspective, the following things are important :

Prelims level : Poverty measurement, MPI , Various committees

Mains level : Poverty measurement

US President recently praised India for having lifted “over 270 million people out of poverty” in “a single decade”, and said that “12 Indian citizens are lifted out of extreme poverty every single minute of every single day”.

What is poverty?

  • Poverty can be defined as a condition in which an individual or household lacks the financial resources to afford a basic minimum standard of living.
  • Economists and policymakers estimate “absolute” poverty as the shortfall in consumption expenditure from a threshold called the “poverty line”.
  • The “depth” of poverty indicates how far the poor are below the poverty line.

Defining the poverty line

  • The official poverty line is the expenditure incurred to obtain the goods in a “poverty line basket” (PLB).
  • Poverty can be measured in terms of the number of people living below this line (with the incidence of poverty expressed as the head count ratio).

Committees for poverty estimates

  • Six official committees have so far estimated the number of people living in poverty in India — the working group of 1962; V N Dandekar and N Rath in 1971; Y K Alagh in 1979; D T Lakdawala in 1993; Suresh Tendulkar in 2009; and C Rangarajan in 2014.
  • The government did not take a call on the report of the Rangarajan Committee; therefore, poverty is measured using the Tendulkar poverty line.
  • As per this, 21.9% of people in India live below the poverty line.

Poverty Line Basket (PLB)

  • The PLB comprises goods and services considered essential to a basic minimum standard of living — food, clothing, rent, conveyance, and entertainment.
  • The price of the food component can be estimated using calorie norms or nutrition targets.
  • Until the 1990s, the calorie norms method was used — it was based on the minimum number of calories recommended by the Indian Council of Medical Research (ICMR) for a household of five members.
  • However, this method does not consider the different food groups that are essential for health — this is why the Tendulkar Committee targeted nutritional outcomes.
  • The Lakdawala Committee assumed that health and education is provided by the state — therefore, expenditure on these items was excluded from the consumption basket it proposed.
  • Since expenditure on health and education rose significantly in the 1990s, the Tendulkar Committee included them in the basket.
  • As a result of revisions to the basket and other changes in the method of estimation, the percentage of people living below the poverty line in 1993-94 rose from 35.97% to 45.3%.

Issues with PLB

  • The PLB has been the subject of much debate. The 1962 group did not consider age and gender-specific calorie requirements.
  • Expenditure on health and education were not considered until the Tendulkar Committee — which was criticized for setting the poverty line at just Rs 32 per capita per day in urban India (and at Rs 27 in rural India).
  • And the Rangarajan Commission was criticized for selecting the food component arbitrarily — the emphasis on food as a source of nutrition overlooks the contribution of sanitation, healthcare, access to clean water, and prevalence of pollutants.

Why are poverty numbers important?

  • Poverty numbers matter because central welfare schemes like Antyodaya Anna and Rashtriya Swasthya Bima Yojana use the definition of poverty given by the NITI Aayog or the erstwhile Planning Commission.
  • The Centre allocates funds for these schemes to states based on the numbers of their poor.
  • Errors of exclusion can deprive eligible households of benefits.

Alternate measures of poverty: The MPI

  • In 2011, Oxford University researchers Sabina Alkire and James Foster devised the multidimensional poverty index (MPI) to capture poverty using 10 indicators.
  • These indicators include nutrition, child mortality, years of schooling, school attendance, ownership of assets, and access to proper house, electricity, drinking water, sanitation, and clean cooking fuel.
  • Poverty is measured in terms of deprivation in at least a third of these indicators.
  • The MPI is a more comprehensive measure of poverty because it includes components that capture the standard of living more effectively.
  • However, uses “outcomes” rather than expenditure — the presence of an undernourished person in the household will result in it being classified as “poor”, regardless of the expenditure on nutritious food.

MPI measures of India

  • In 2015-16, 369.546 million (nearly 37 crore) Indians were estimated to meet the deprivation cut-off for three or more of the 10 indicators.
  • While the overall headcount multidimensional poverty ratio in 2015-16 was 27.9%, the number was 36.8% for rural and 9.2% for urban India.
  • There were wide variations across states — poverty was the highest for Bihar (52.5%), followed by Jharkhand (46.5%), Madhya Pradesh (41.1%), and Uttar Pradesh (40.8%).
  • It was the lowest for Kerala (1.1%), Delhi (4.2%), Punjab (6.1%), Tamil Nadu (7.3%) and Himachal Pradesh (8.1%).

So what is the current “level” of poverty in India?

  • The National Statistical Office (NSO) Report on Household Consumer Expenditure for 2017-18 was junked in 2019 — so there are no data to update India’s poverty figures.
  • Even the MPI report published by Oxford Poverty and Human Development Initiative used data from the fourth round of the National Family Health Survey, figures for which are available only until 2015-16.
  • Social scientists used data from a leaked version of the consumer expenditure data to conclude that the incidence of poverty in India increased from 31.15% to 35.1% between 2011-12 and 2017-18.
  • The absolute number of poor people also increased from 270 million to 322.22 million over the same period, which translates to 52 million more poor people in six years.

Poverty Eradication – Definition, Debates, etc.

‘Time to Care’ Report


From UPSC perspective, the following things are important :

Prelims level : 'Time to Care' Report

Mains level : Income inequality in India


The report ‘Time to Care’  was recently released ahead of the 50th Annual Meeting of the World Economic Forum (WEF).

‘Time to Care’ Report

  • It is published by Oxfam International.
  • Its calculations are based on the latest data sources available, including from the Credit Suisse Research Institute’s Global Wealth Databook 2019 and Forbes’ 2019 Billionaires List.

Findings of the report

  • Although global inequality has declined over the past three decades, domestic income inequality has risen in many countries, particularly in advanced economies and reached historic highs.
  • The report said that the world’s 2,153 billionaires have more wealth than the 4.6 billion people who make up 60 per cent of the planet’s population.
  • The report flagged that global inequality is shockingly entrenched and vast and the number of billionaires has doubled in the last decade, despite their combined wealth having declined in the last year.
  • The Oxfam report further said “sexist” economies are fuelling the inequality crisis by enabling a wealthy elite to accumulate vast fortunes at the expense of ordinary people and particularly poor women and girls.

Income inequality in India

  • India’s richest 1 per cent hold more than four-times the wealth held by 953 million people who make up for the bottom 70 per cent of the country’s population.
  • The total wealth of all Indian billionaires is more than its full-year budget.
  • Regarding India, Oxfam said the combined total wealth of 63 Indian billionaires is higher than the total Union Budget of India for the fiscal year 2018-19 which was at Rs 24,42,200 crore.
  • It further said women and girls put in 3.26 billion hours of unpaid care work each and every day — a contribution to the Indian economy of at least Rs 19 lakh crore a year, which is 20 times the entire education budget of India in 2019 (Rs 93,000 crore).
  • He said women and girls are among those who benefit the least from today’s economic system.
  • They spend billions of hours cooking, cleaning and caring for children and the elderly. Unpaid care work is the ‘hidden engine’ that keeps the wheels of our economies, businesses and societies moving.

Data on earnings

  • Oxfam said governments are massively under-taxing the wealthiest individuals and corporations and failing to collect revenues that could help lift the responsibility of care and tackle poverty and inequality.
  • As per the report, it would take a female domestic worker 22,277 years to earn what a top CEO of a technology company makes in one year.
  • With earnings pegged at Rs 106 per second, a tech CEO would make more in 10 minutes than what a domestic worker would make in one year.
  • Besides, direct public investments in the care economy of 2 per cent of GDP would potentially create 11 million new jobs and make up for the 11 million jobs lost in 2018, the report said.

Poverty Eradication – Definition, Debates, etc.

Global Social Mobility Report 2020


From UPSC perspective, the following things are important :

Prelims level : Global Social Mobility Report 2020 and its highlights

Mains level : Social Mobility


The Global Social Mobility Report was recently released at the ongoing World Economic Forum at Davos, Switzerland.

Global Social Mobility Report

  • The World Economic Forum organizes the well-known annual gathering of the world’s most influential business and political decision-makers at Davos.
  • It has come out with its first-ever Global Social Mobility Report, which has ranked India a lowly 72 out of the 82 countries profiled.
  • According to the report, the Nordic economies such as Denmark and Finland top the social mobility rankings while countries like India, Pakistan, Bangladesh and South Africa languish at the bottom (see Table 1).

Table 1: WEF’s Global Social Mobility Rankings

Country Rank (out of 82)
Denmark 1
Germany 11
United Kingdom 21
United States 27
Russia 39
China 45
Saudi Arabia 52
Brazil 60
India 76
Pakistan 79


What is the context for this report?

  • Notwithstanding fast global growth, inequalities have been growing across the world.
  • The rise of inequality has not only created massive social unrest but also adversely affected the global consensus on the kind of economic policies that countries follow.
  • A good example of this is the rise of trade protectionism across the world over the past few years.
  • Be it US or the UK several countries have started looking inwards in the hope that greater trade protectionism will help allay the fears and apprehensions of domestic workers.

What is Social Mobility?

  • Typically, inequalities are measured in income terms. And this measure has been found inadequate.
  • As the report states, “many situations exist where, despite high levels of absolute income mobility, relative social mobility remains low.
  • For example, in economies such as China and India, economic growth can lift entire populations upward in terms of absolute income, but an individual’s status in society relative to others remains the same”.
  • The report states: “The notion of relative social mobility is more closely related to the social and economic status of an individual relative to their parents. I
  • n a country with a society with perfect relative mobility, a child born in a low-income family would have as much chance to earn a high income as a child born to parents who earn a high income”.

Thus, the concept of social mobility is much broader than just looking at income inequality. It encompasses several concerns such as:

  • Intragenerational mobility: The ability for an individual to move between socio-economic classes within their own lifetime.
  • Intergenerational mobility: The ability for a family group to move up or down the socio-economic ladder across the span of one or more generations.
  • Absolute income mobility: The ability for an individual to earn, in real terms, as much as or more than their parents at the same age.
  • Absolute educational mobility: The ability for an individual to attain higher education levels than their parents.
  • Relative income mobility: How much of an individual’s income is determined by their parents’ income.
  • Relative educational mobility: How much of an individual’s educational attainment is determined by their parents’ educational attainment.

Why does social mobility matter?

  • How far an individual can move up in the society determines a lot whether one is closer to the income “floor” (or poor) or “ceiling” (or rich).
  • Social mobility levels, then, can help us understand both the speed – that is, how long it takes for individuals at the bottom of the scale to catch up with those at the top – and the intensity – that is, how many steps it takes for an individual to move up the ladder in a given period – of social mobility.
  • Research also shows that countries with high levels of relative social mobility—such as Finland, Norway or Denmark— exhibit lower levels of income inequality.
  • Conversely, countries with low relative social mobility—such as India, South Africa or Brazil—also exhibit high levels of economic inequality.
  • That’s why it matters for countries like India to increase social mobility.


As shown in Table 2, it would take a whopping 7 generations for someone born in a low-income family in India to approach mean income level; in Denmark, it would only take 2 generations.


Table 2: Income Mobility across Generations

Country Number of generations required by a poor family member to achieve mean income level
Denmark 2
United States/ United Kingdom 5
Germany/ France 6
India/China 7
Brazil/South Africa 9


So, how is social mobility calculated?

The WEF’s Global Social Mobility Index assesses the 82 economies on “10 pillars” spread across the following five key dimensions of social mobility:

  1. Health;
  2. Education (access, quality and equity, lifelong learning);
  3. Technology;
  4. Work (opportunities, wages, conditions);
  5. Protection and Institutions (social protection and inclusive institutions).

How did India perform on each of the 10 pillars of social mobility?

India’s overall ranking is a poor 76 out of the 82 countries considered. Thus it should not come as any surprise that India ranks lowly in individual parameters as well.

Table 3 below provides the detailed breakup.

Table 3: Where India ranks on the 10 Pillars of Social Mobility

Parameter Rank (out of 82 countries)
Health 73
Access to Education 66
Quality and Equity in Education 77
Lifelong learning 41
Access to Technology 73
Work Opportunities 75
Fair Wage Distribution 79
Working Conditions 53
Social Protection 76
Inclusive Institutions 67



World Economic Forum (WEF)

  • The WEF based in Cologny-Geneva, Switzerland, is an NGO founded in 1971.
  • The WEF’s mission is cited as “committed to improving the state of the world by engaging business, political, academic, and other leaders of society to shape global, regional, and industry agendas”.
  • It is a membership-based organization, and membership is made up of the world’s largest corporations.
  • The WEF hosts an annual meeting at the end of January in Davos, a mountain resort in Graubünden, in the eastern Alps region of Switzerland.

Various reports published by WEF:

[Tikdam: Most (Not all) reports titled with ‘Global’ are released by WEF.]

  1. Global Competitiveness Report
  2. Global Information Technology Report
  3. Global Gender Gap Report
  4. Global Travel and Tourism Report
  5. Global Enabling Trade Report etc.

Poverty Eradication – Definition, Debates, etc.

[oped of the day] The new gold standard in development economics?


From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : RCT application


Development economics has changed a lot during the last two decades mostly due to the extensive use of ‘randomised control trials’ (RCT). 


    • Used in developing economies – RCTs are used to assess long-run economic productivity and living standards in poor countries.
    • Evolution of RCT – The concept of RCT is quite old; instances of RCTs can be traced back in the 16th century. 
    • The statistical foundation of RCT was developed by British statistician Sir Ronald Fisher, about 100 years ago, mostly in the context of the design of experiments.


    • Prof. Banerjee thinks RCTs “are the simplest and best way of assessing the impact of a program”.
    • Prof. Duflo refers to RCTs as the “tool of choice”.

Use in clinical trials

    • Evaluation of performance – For an unbiased evaluation of the treatment, its performance needs to be compared with some ‘control’, which may be ‘no treatment’ at all or an ‘existing treatment’ other than the treatment under study.
    • Allocating patients – The next task is to allocate the patients among two treatments/interventions at hand. Patients might prefer some treatment to the other. 
    • No prior knowledge – Prior knowledge of the treatments to be applied to them might induce a ‘selection bias’ due to unequal proportions of patients opting-out from the study. 
    • ‘Randomisation’ – it is a procedure used to prevent this by allocating patients using a random mechanism — neither the patient nor the doctor would know the allocation.
    • ‘Control’ and ‘randomisation’ together constitute an RCT. 

Application in early trials: ART

    • In 1995, statisticians Marvin Zelen and Lee-Jen Wei illustrated a clinical trial to evaluate the hypothesis that the antiretroviral therapy AZT reduces the risk of maternal-to-infant HIV transmission. 
    • A standard randomisation scheme was used resulting in 238 pregnant women receiving AZT and 238 receiving standard therapy (placebo). 
    • It is observed that 60 newborns were HIV-positive in the placebo-group and 20 newborns were HIV-positive in the AZT-group. 
    • Thus, the failure rate of the placebo was 60/238, whereas that of AZT was only 20/238, indicating that AZT was much more effective than the placebo.

Benefits of RCT

    • Overcoming heterogeneity – Drawing such an inference, despite heterogeneity among the patients, was possible only due to randomisation.
    • Easy comparability – Randomisation makes different treatment groups comparable and also helps to estimate the error associated with the inference.
    • Anonymity – It ensures that allocation to any particular treatment remains unknown to both patient and doctor. Such ‘blinding’ is central to the philosophy of clinical trials and it helps to reduce certain kinds of bias in the trial.

Applications of RCT

    • Agriculture – The early applications of RCTs were mostly within the agricultural field. 
    • RCT got its importance in clinical trials since the 1960s. Almost any clinical trials nowadays without RCT were being considered almost useless.

Use for social causes

    • Social scientists slowly found RCT to be interesting, doable, and effective. 
    • Social policies – Numerous interesting applications of RCTs took place in social policy-making during the 1960-90s. Eventually, RCTs took control of development economics since the mid-1990s. 
    • About 1,000 RCTs were conducted by the three Nobel Laureates in 83 countries such as India, Kenya, and Indonesia to study various dimensions of poverty, including microfinance, access to credit, behavior, health care, immunisation programs, and gender inequality. 

Success stories

    • Finland’s Basic Income experiment (2017-18) – 2000 unemployed Finns between ages 25-58 were randomly selected across the country and were paid €560 a month instead of basic unemployment benefits. 
    • Results from the first year data didn’t have any significant effect on the subjects’ employment in comparison with individuals who were not selected for the experimental group. 

Criticism of RCT

    • Chances of dilution – In order to conduct RCTs, the broader problem is being sliced into smaller ones. Any dilution of the scientific method leaves the conclusions questionable. 
    • Economists such as Martin Ravallion, Dani Rodrik, William Easterly, and Angus Deaton are very critical of using RCTs in economic experiments.
    • Limitations of blinding – such kind of ‘blinding’ are almost impossible to implement in economic experiments as participants would definitely know if they get any financial aid or training. Thus, randomisation must have much less impact there.

Importance of randomisation

    • Unless randomisation is done, most of the standard statistical analyses and inference procedures become meaningless.
    • Earlier social experiments lacked randomisation and that might be one reason that statisticians such as Sir Ronald Fisher were unwilling to employ statistics in social experiments. 
    • “RCT or no RCT” may not be just a policy decision to economics; it is the question of shifting the paradigm. 
    • As randomisation dominates development economics, economic experiments are becoming more and more statistical.


Harvard economist Lant Pritchett criticises RCTs on a number of counts but still agrees that it “is superior to other evaluation methods”.

Poverty Eradication – Definition, Debates, etc.

Explained: Randomized Controlled Trial (RCT)


From UPSC perspective, the following things are important :

Prelims level : Randomized Controlled Trial (RCT)

Mains level : Applications of RCT in poverty alleviation

  • The 2019 Nobel Prize in Economic Sciences was awarded to three economists for their pioneering research into the use of experimental approaches to fight global poverty.
  • The new Nobel laureates are considered to be instrumental in using randomized controlled trials to test the effectiveness of various policy interventions to alleviate poverty.

Randomized Controlled Trial

  • A RCT is an experiment that is designed to isolate the influence that a certain intervention or variable has on an outcome or event.
  • A social science researcher who wants to find the effect that employing more teachers in schools has on children’s learning outcomes, for instance, can conduct a randomized controlled trial to find the answer.
  • The use of randomized controlled trials as a research tool was largely limited to fields such as biomedical sciences where the effectiveness of various drugs was gauged using this technique.
  • The Nobel laureates’ trio applied RCT to the field of economics beginning in the 1990s.
  • Kremer first used the technique to study the impact that free meals and books had on learning in Kenyan schools.
  • Banerjee and Ms. Duflo later conducted similar experiments in India and further popularised RCTs through their book Poor Economics, published in 2011.

Why is RCT so popular?

  • At any point in time, there are multiple factors that work in tandem to influence various social events.
  • RCTs allow economists and other social science researchers to isolate the individual impact that a certain factor alone has on the overall event.
  • For instance, to measure the impact that hiring more teachers can have on children’s learning, researchers must control for the effect that other factor such as intelligence, nutrition, climate, economic and social status etc.
  • RCTs promise to overcome this problem through the use of randomly picked samples.
  • Using these random samples, they believe, researchers can then conduct experiments by carefully varying appropriate variables to find out the impact of these individual variables on the final event.

Criticisms of RCT

  • A popular critic of randomized controlled trials is economist Angus Deaton, who won the economics Nobel Prize in 2015.
  • He has contended in his works that simply choosing samples for an RCT experiment in a random manner does not really make these samples identical in their many characteristics.
  • While two randomly chosen samples might turn out to be similar in some cases, he argued, there are greater chances that most samples are not really similar to each other.
  • RCTs are more suited for research in the physical sciences where it may be easier to carry out controlled experiments.

Poverty Eradication – Definition, Debates, etc.

Economics Nobel Prize 2019


From UPSC perspective, the following things are important :

Prelims level : Nobel Prize

Mains level : Poverty eradication strategies and its success

  • The 2019 Nobel Prize in Economics has been awarded jointly to Indian origin Abhijit Banerjee, Esther Duflo and Michael Kremer for their experimental approach to alleviating global poverty.

Why Nobel?

  • As a direct result of one of their studies, more than five million Indian children have benefitted from effective programmes of remedial tutoring in schools.
  • It was also successfully implemented in introducing heavy subsidies for preventive healthcare in many countries.

About the theory

  • Both Banerjee and Duflo have written a noted book titled “Poor Economics”, are associated with the MIT while Kremer is with the Harvard University.
  • The laureates applied themselves to problems of development economics, especially poverty alleviation.
  • The approach, which transformed the development economics field, involves dividing the issue into smaller, more manageable, questions.
  • They chose to break down some of the most intractable issues into smaller parts and tried to understand what policy worked and what did not.

Ex. School-going children aren’t learning enough

  • What Banerjee did was to break this issue down to understanding whether providing more inputs, such as textbooks, helps matters.
  • They found, merely giving more books doesn’t help unless the schools were also provided with complimentary reforms.
  • The approach thus was to conduct field experiments and understand whether a small policy initiative works or doesn’t and if it doesn’t and why doesn’t it.
  • Tackling the problem this way helped researchers across the world better understand why some policies have worked and what policies need to be discarded.

Poverty Eradication – Definition, Debates, etc.

Lifting 271 mn out of poverty in 10 yrs, India fastest, Jharkhand No. 1 area: UN


From UPSC perspective, the following things are important :

Prelims level : UN report


India has registered the fastest absolute reduction in the Multidimensional Poverty Index (MPI) value among ten countries, spanning every developing region, whose combined population is two billion people. And Jharkhand is among the poorest regions in the world improving the fastest.

  • According to the global MPI 2019 report released Thursday, between 2005-06 and 2015-16, India, lifted 271 million out of poverty, significantly reducing deprivations in many of the ten indicators, particularly in “assets, cooking fuel, sanitation and nutrition”.
  • The MPI captures both the incidence and intensity of poverty.
  • The global MPI tracks 101 countries on deprivations across ten indicators in health, education, and standard of living.
  • Developed in 2010 by the Oxford Poverty and Human Development Initiative (OPHI) and the United Nations Development Programme (UNDP), it looks beyond income poverty and tracks poverty in terms of the deprivation faced by people in their daily lives.
  • The report stated: “Among selected countries with a significant reduction in MPI value, India demonstrates the clearest pro-poor pattern at the subnational level: the poorest regions reduced multidimensional poverty the fastest in absolute terms”.

Case Study of Jharkhand

  • It cites Jharkhand, which reduced multidimensional poverty from 74.9 per cent to 46.5 per cent in the ten years since 2005-06, as an example of the poorest region improving the fastest followed by Rattanak Kiri in Cambodia.
  • Among the four Indian states with the most acute MPI — Bihar, Jharkhand, Uttar Pradesh and Madhya Pradesh — Jharkhand has made the most progress.
  • Overall, India was among three countries where poverty reduction in rural areas outpaced that in urban areas, which as per the report, is an indicator of pro-poor development.

Other findings

  • The National Family Health Survey round three and four (NHFS 2005-06 & 2015-16) is the source for the comparative data on the indicators.
  • In this period, the report stated,  the incidence of multidimensional poverty in India has almost halved, to 27.9 per cent from 55.1 per cent, lifting 271 million out of poverty — from 640 million to around 369 million.
  • With regards to intensity, the reduction is negligible — from 51.1 per cent to 43.9 per cent — which goes to show that the experience of the poor person, how they face deprivation, hasn’t changed all that dramatically.
  • “Traditionally disadvantaged subgroups such as those living in rural India, Muslims, the Scheduled Castes and Tribes, and young children are still the poorest in India,” said a UNDP official.
  •  The MPI captures the huge progress India has made in reducing multidimensional poverty across the country, while also providing a more complete picture of who is deprived, how they are deprived, and where they live.
  • That the poorest parts of the country are more quickly lifting people out of poverty demonstrates India’s commitment to ensuring no one is left behind, in line with the Sustainable Development Goals and the government’s own priorities.


  • The ten developing nations for which the comparison is made include countries across income categories: upper middle (Peru), lower middle (Bangladesh, Cambodia, India, Nigeria, Pakistan, Vietnam) and low (Democratic Republic of the Congo, Ethiopia, Haiti).
  • Across the 101 countries, 23.1 per cent of the people are multidimensionally poor. Fifty per cent of multidimensionally poor people are children, and a third are children under age 10 with over 85 per cent of poor children living in South Asia and Sub-Saharan Africa.

Poverty Eradication – Definition, Debates, etc.

[op-ed snap] Rethink poverty — and policy


From UPSC perspective, the following things are important :

Prelims level : Poverty line

Mains level : There is a need to rethink our approach to handle poverty.


There should be seismic changes in the way Indians (including the Union government) think about absolute poverty and its alleviation, macro-growth policies and micro policies, especially those on agriculture.

First rethink: We are not a poor country any more, not with just 4.5 per cent of the population classified as poor .

Second rethink: We have always considered food consumption as the ultimate criterion of poverty. Time has come to dismantle this ecosystem — an ecosystem that is biased against the poor farmer, against climate change mitigation and also against efficient use of water and energy.

Third rethink: 4.5 per cent of the population as poor is not right, does not sound right, and isn’t right. The rethink has to be about defining poverty in relative, not absolute terms.

Fifth rethink: We should recognise that that the country has a messed up and archaic agricultural policy, one that was not even fit for the earlier poor economy times.

1.Basic income programme

  • The new approach towards poverty alleviation should involve targeted income transfers.
  • Under a targeted basic income programme, which is a top-up scheme, the government transfers the poverty gap (difference between per capita consumption of the household and the poverty line faced by the household) into the bank account of the poor.
  • The cost of such a programme is likely to be between Rs 2.5 and 3 trillion and it will ensure nobody has a consumption below the poverty line.
  • India’s current expense on poverty alleviation programmes is approximately Rs 3.4 trillion and the cost to make one person non-poor through the PDS in 2011-12 was Rs 24,000.
  • The same for MGNREGA was Rs 40,500.
  • Therefore, assuming perfect targeting, a basic income programme is likely to cost substantially less that the current policies and it will ensure that the poverty rate is reduced to zero based on the higher poverty line.

Benefits of direct benefit transfer

  • The direct benefit transfer mechanism of the government has been able to resolve targeting problems for a bulk of the 430 government schemes and subsidies.
  • The current PM-Kisan programme that provides income support to approximately 14 crore farmers is an example of how, through DBT, the government can provide direct income support as its focal policy towards poverty alleviation.
  • Such a policy is likely to help the government in rationalising and consolidating its poverty reduction programmes, thereby freeing up resources for other sectors in the economy.
  •  The government should focus on bringing more people under the tax net at the higher income brackets.
  • Our recommendation towards achieving the same would be to reduce both corporate income tax rate and the highest personal income tax rate to a flat 25 per cent.
  • Therefore, to improve revenue realisation from direct taxes, the government should focus on improving compliance by reducing the highest slabs of the tax rate. 

3. Investment Reforms

  • The Indian economy requires adequate investments in critical areas such as road, railways and water.
  • Therefore, the government needs to rationalise its expenditure and tax rates to ensure reallocation of resources.


Our pace of poverty reduction has improved over the last five years. We can augment this through a targeted basic income policy and free up resources for other sectors of the economy. Times have changed and so should our policies towards poverty alleviation.

Poverty Eradication – Definition, Debates, etc.

[op-ed snap] A stable plane


From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : Increasing population requires upgradation in services.


The key message from the UN’s World Population Prospects 2019 report is that national leaders must redouble their efforts to raise education, health and living standards for people everywhere.


  • India is projected to become the most populous country by 2027 surpassing China, and host 1.64 billion people by 2050; the world as a whole could be home to 8.5 billion people in just over a decade from now, and the number could go up to 9.7 billion by mid-century.
  • The projections should be viewed in perspective, considering that alarmist Malthusian fears of inability to provide for more than a billion people on earth did not come true.
  • Yet, there are strong arguments in favour of stabilising population numbers by raising the quality of life of people and achieving sustainable development that will not destroy the environment.

Situation worldwide

  • The UN report shows migration to countries with a falling ratio of working-age people to those above 65 will be steady, as those economies open up to workers to sustain economic production.
  • Japan has the lowest such ratio, followed by Europe and the Caribbean; in over three decades, North America, Eastern and Southeastern Asia will join this group.
  • India meanwhile will have a vast number of young people and insufficient natural resources left for exploitation.
  • Preparing for the changes and opportunities migration offers will depend on a skills revolution.

National Situation

  • At the national level, achieving a reduction in fertility rates in States such as Bihar, Uttar Pradesh, Haryana, Madhya Pradesh, Jharkhand and Chhattisgarh — which are high as per Sample Registration System data — is a challenge for India as it seeks to stabilise population growth.
  • This is possible if the State governments set their minds to it.
  • They must singularly focus on improving education and health access for women, both of which will help them be gainfully employed.

Catering to  Old population

  • On the other hand, a rise in life expectancy has brought with it a policy imperative that is bound to become even more important in the coming decades.
  • A growing population of older adults is a certainty, and it opens up prospects for employment in many new services catering to them.
  • Urban facilities have to be reimagined, with an emphasis on access to good, affordable housing and mobility.

Other Initiatives

  • The Sustainable Development Goals framework provides a roadmap to this new era.
  • But progress in poverty reduction, greater equality, better nutrition, universal education and health care, needs state support and strong civil society institutions.
  • Making agriculture remunerative and keeping food prices stable is crucial to ensure nutrition for all.
  • India is set to become the most populous nation. For its leaders, improving the quality of life for its people will be a test of political will.

Poverty Eradication – Definition, Debates, etc.

Global Multidimensional Poverty Report 2018


Mains Paper 1: Social Issues | Poverty & development issues

From UPSC perspective, the following things are important:

Prelims level: Global MPI report 2108

Mains level: India’s efforts in reducing poverty and their outcomes


  • The Global MPI 2018 Report was recently published by the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative.

What is global MPI?

  • The global Multidimensional Poverty Index (MPI) is an international measure of acute poverty covering over 100 developing countries.
  • It complements traditional income-based poverty measures by capturing the severe deprivations that each person faces at the same time with respect to education, health and living standards.
  • The global MPI was developed by OPHI with the UN Development Programme (UNDP) for inclusion in UNDP’s flagship Human Development Report in 2010. It has been published in the HDR ever since.

Global MPI 2018 Report

  • The report measures MPI, or multidimensional poverty index, which it says can be broken down to show “who is poor” and “how they are poor”.
  • This factor in two measures, poverty rate as a percentage of the population, and intensity as the average share of deprivations that poor people experience.
  • The product of these two is MPI. If someone is deprived in a third or more of 10 weighted indicators, the global index identifies them as “MPI poor”.

India’s progress

  • India has reduced its poverty rate drastically from 55% to 28% in 10 years, with 271 million people moving out of poverty between 2005-06 and 2015-16.
  • The report, covering 105 countries, dedicates a chapter to India because of this remarkable progress.
  • However, India still had 364 million poor in 2015-16, the largest for any country, although it is down from 635 million in 2005-06.
  • Of the 364 million people who were MPI poor in 2015-16, 156 million (34.6%) were children.
  • In India, poverty reduction among children, the poorest states, Scheduled Tribes, and Muslims was fastest, the report says.

Statewise Report

  • Bihar was the poorest state in 2015-16, with more than half its population in poverty.
  • The four poorest states —Bihar, Jharkhand, Uttar Pradesh, and Madhya Pradesh — were still home to 196 million MPI poor people, which was over half of all the MPI poor people in India.
  • Jharkhand had the greatest improvement, followed by Arunachal Pradesh, Bihar, Chhattisgarh, and Nagaland.
  • At the other end, Kerala, one of the least poor regions in 2006, reduced its MPI by around 92%.

Global Highlights

  • 3 billion people live in multidimensional poverty.
  • 83% of all multidimensionally poor people in the world live in Sub-Saharan Africa and South Asia.
  • Two-thirds of all MPI poor people live in middle-income countries.
  • Half of the multidimensionally poor are children aged 0-17.
  • 85% of MPI poor people live in rural areas.
  • 46% of those who are multidimensionally poor live in severe poverty.
  • In 2015/16, more than 364 million people are still MPI poor in India.
  • In India, 271 million people moved out of poverty in ten years.
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