Extreme poverty in India reduced by over 12 percentage points in 2019 as compared with 2011 and the poverty headcount rate has declined from 22.5 per cent in 2011 to 10.2 per cent in 2019, according to a Working Paper of the World Bank. It added that the decline in poverty was much higher in rural areas.
The paper, titled ‘Poverty has Declined over the last decade But Not As Much As Previously Thought’, said poverty reduction was higher in rural areas compared to urban India as rural poverty declined from 26.3 per cent in 2011 to 11.6 per cent in 2019; while in urban areas, it fall to 6.3 per cent from 14.2 per cent during the same period.
The World Bank paper, authored by economists Sutirtha Sinha Roy and Roy van der Weide, said farmers with small landholding sizes have experienced higher income growth. “Real incomes for farmers with the smallest landholdings have grown by 10 percent in annualized terms between the two survey rounds [2013 and 2019] compared to a 2 percent growth for farmers with the largest landholding.”
It added that rural and urban poverty dropped by 14.7 and 7.9 percentage points during 2011-19.
The World Bank used two approches to estimate the poverty. It said, “Both approaches yield qualitatively similar levels and trends in headcount poverty estimated at the USD 1.90 line: poverty is about 12.3 percentage points lower in 2019 than 2011.”
The World Bank said, “This paper sheds light on how poverty and inequality have evolved since 2011 using a new household panel survey, the Consumer Pyramids Household Survey conducted by a private data company.”
It said extreme poverty fell 3.4 percentage points from 22.5 per cent in 2011 and to 19.1 per cent in 2015. Poverty saw a sharper fall of 9.1 percentage points between 2015 and 2019 from 19.1 per cent to 10 per cent. Extreme poverty reduced by 3.2 percentage points between 2017 and 2018, which was the fastest rate in over two decades.
The paper said urban poverty in India rose by 2 percentage point in 2016 coinciding with the demonetisation, and rural poverty rose by 10 basis points in 2019, coinciding with a slowdown in the economy.
“We detect two incidences of rising poverty in our period of analysis: urban poverty rose by 2 percentage points in 2016 during the demonetisation event and fell sharply thereafter; and, rural poverty rose by 10 basis points in 2019 likely due to a growth slowdown,” it added.
Recently, the International Monetary Fund (IMF) also released a paper on poverty in India. It said extreme poverty in India was below one per cent in the pre-pandemic year 2019 and food transfers, through the Pradhan Mantri Garib Kalyan Yojana (PMGKY), were instrumental in ensuring that it remained at that low level in the pandemic year 2020 also.
It added, “Post-food subsidy inequality at 0.294 is now very close to its lowest level 0.284 observed in 1993/94.”
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