Why in the News?
A recent study titled ‘Poverty Decline in India after 2011–12: Bigger Picture Evidence’ shows that poverty in India fell from 37% in 2004-05 to 22% in 2011-12. However, poverty declined by only an additional 18% until 2022-23, and officials have not released any poverty estimates after 2011-12.
What are the three methods used to estimate post-2011 poverty in India?
- Alternative NSSO Surveys: Using different socio-economic surveys like the Usual Monthly Per Capita Consumption Expenditure (UMPCE) from NSSO rounds after 2011-12, despite comparability issues with earlier surveys. Eg: Estimates based on UMPCE suggest poverty between 26-30% in 2019-20.
- Private Final Consumption Expenditure (PFCE) Scaling: Scaling consumption data from the 2011-12 Household Consumption Expenditure Survey using the growth rate of PFCE from National Accounts Statistics (NAS) to estimate consumption trends. Eg: Used by economist Surjit Bhalla and colleagues in 2022.
- Survey-to-Survey Imputation: Filling data gaps by linking related surveys (e.g., consumption surveys with employment surveys) through imputation models, often at the State level for better accuracy. Eg: The recent study titled ‘Poverty Decline in India after 2011–12: Bigger Picture Evidence’ study using NSSO Employment-Unemployment Surveys with Consumer Expenditure Surveys to estimate poverty decline to about 18% in 2022-23.
Note: Surjit Bhalla is an Indian economist, author, and columnist who served as Executive Director for India at the International Monetary Fund. |
How much has poverty declined post-2011–12, and how does it compare with the earlier period?
- Sharp slowdown: Poverty fell from 37% (2004–05) to 22% (2011–12), a 15-point drop, but only to 18% by 2022–23, a mere 4-point reduction in over a decade.
- Absolute poverty numbers: Number of poor declined from 250 million to 225 million in 10 years — a decline of only 10%, compared to a much faster fall earlier.
- GDP correlation: GDP growth slowed from 6.9% (2004–12) to 5.7% (2012–23), consistent with slower poverty reduction.
Why has the poverty reduction slowed since 2011-2012?
- Slower GDP Growth: Average GDP growth declined from 6.9% (2004-05 to 2011-12) to 5.7% (2011-12 to 2022-23), correlating with slower poverty reduction.
- Declining Real Wage Growth: Growth in rural wages slowed down significantly — from 4.13% annually before 2011-12 to 2.3% after 2011-12.
- Rising Agricultural Workforce with Lower Productivity: After a decline in agricultural workers till 2017-18, 68 million workers joined agriculture post-2017-18, leading to lower agricultural productivity and wages, which hampers poverty reduction.
How do the Poverty trends vary across Indian States?
- Significant Poverty Reduction: Some states have shown marked improvement in reducing poverty levels after 2011-12. Eg: Uttar Pradesh has notably decreased its poverty rate during this period.
- Slow Progress: Historically poor states continue to struggle with slow poverty reduction due to persistent socio-economic challenges. Eg: Jharkhand and Bihar have experienced much slower declines in poverty rates.
- Stagnation: Several large and economically important states have seen poverty reduction stagnate, with little change over the years. Eg: Maharashtra and Andhra Pradesh show almost no improvement in poverty reduction post-2011-12.
What are the steps taken by the Indian Government?
- Implementation of Social Welfare Schemes: The government has launched various targeted welfare programs to support the poor and vulnerable groups. Eg: Pradhan Mantri Awas Yojana for affordable housing.
- Focus on Employment Generation: Programs aimed at creating jobs, especially in rural areas, to increase income and reduce poverty. Eg: Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
- Financial Inclusion Initiatives: Efforts to increase access to banking and financial services for the poor. Eg: Jan Dhan Yojana, which promotes opening of bank accounts for the unbanked.
- Agricultural Support and Reforms: Policies to improve farmers’ incomes and agricultural productivity to support rural livelihoods. Eg: PM-Kisan Samman Nidhi, providing direct income support to farmers.
- Health and Education Programs: Investments in healthcare and education to improve human capital and break the cycle of poverty. Eg: Ayushman Bharat health insurance scheme for poor families.
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Way forward:
- Rural Wage & Productivity Growth: Boost rural wages and agricultural productivity by implementing reforms, improving access to technology, and providing skill development to increase income and reduce poverty sustainably.
- Data Accuracy & Monitoring: Improve data collection and real-time monitoring of poverty indicators to ensure precise measurement, enabling better-targeted policies and effective poverty alleviation programs.
Mains PYQ:
[UPSC 2015] Though there have been several different estimates of poverty in India, all indicate reduction in poverty levels over time. Do you agree? Critically examine with reference to urban and rural poverty indicators.
Linkage: Estimates consistently show a reduction in poverty over time rather than the underlying surveys or methodologies used to produce them, answering this question effectively would require knowledge that various estimates exist, often derived from different data sources or approaches.
