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India Eliminates Extreme Poverty: US Report

A new report by top American think-tank, The Brookings Institution, written by economists Surjit Bhalla and Karan Bhasin, brings good news for India ahead of the general elections. The report says India has successfully ended extreme poverty, based on a recent consumption survey. It also highlights a significant drop in poverty in cities and rural areas. Bhalla and Bhasin mention that India has fewer poor people than the World Bank estimated.


This news follows recent comments by B V R Subrahmanyam, CEO of the government’s Niti Aayog think-tank, who stated that the consumer expenditure survey suggests poverty has reduced to 5 percent. He mentioned that people in both rural and urban regions are experiencing increased prosperity.


India has witnessed a significant reduction in poverty and inequality, especially for the per person per day poverty line of $1.9 at 2011 prices. The Headcount Poverty Ratio, representing the proportion of the population living below the poverty line, dropped from 12.2 percent in 2011-12 to merely 2 percent in 2022-23.


Rural poverty was 2.5 percent, whereas urban poverty declined to 1 percent. These figures don’t include the free distribution of food (wheat and rice) provided by the government to about two-thirds of the population, nor do they consider the utilization of public health and education services.


Economist Shamika Ravi tweeted, “Extreme poverty is now eliminated in India. The World Poverty Clock update shows India’s extreme poverty at less than 3 percent. This is one of the most significant global developments of our lifetime”.


The Brookings commentary highlighted that the relatively higher consumption growth in rural areas shouldn’t be unexpected. This growth is attributed to robust policy efforts focused on redistribution through various publicly funded programs. These initiatives encompass a national mission to construct toilets and ensure universal access to electricity, modern cooking fuel, and, more recently, piped water.


As of August 15, 2019, rural access to piped water in India was at 16.8 percent, significantly rising to 74.7 percent. The improved access to safe water likely reduced illnesses, enabling families to generate higher incomes. The government identified 112 districts with the lowest development indicators through the Aspirational District Program. These districts were specifically targeted by government policies to enhance their overall development.


The authors said, “Official data now confirms that India has eliminated extreme poverty, as commonly defined in international comparisons. This is an encouraging development with positive implications for global poverty headcount rates”.

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