Recently, the World Bank published a paper entitled ‘Poverty has Declined over the Last Decade But Not As Much As Previously Thought’. This came soon after the International Monetary Fund (IMF) published a working paper stating that India has successfully reduced extreme poverty to its lowest levels in 40 years. The country achieved this through state-funded food handouts, also known as the Public Distribution System.
Notable Takeaways from the Report
The World Bank’s report highlights a decrease in extreme poverty in India by 12.3% points between 2011 and 2019. The poverty headcount rate fell from 22.5% in 2011 to 10.2% in 2019, showing a sharper decline in rural areas. The concept of “extreme poverty” is defined by the World Bank as surviving on less than USD 1.90 per person per day.
Consumption inequality observed a slight dip since 2011, but not as much as shown in the unreleased National Sample Survey-2017. The extent of poverty reduction during 2015-2019 was noticeably lower than previous estimates, which were based on growth in private final consumption expenditure reported in national account statistics.
Rural and Urban Poverty Trends
Poverty reduction was more significant in rural areas compared to urban India. Rural poverty decreased from 26.3% in 2011 to 11.6% in 2019. In contrast, urban areas saw a decline from 14.2% to 6.3% in the same period. However, in 2016, urban poverty in India increased by 2%, corresponding with demonetization, and rural poverty rose by 10% in 2019.
Growth in Income for Small Farmers
Smallholder farmers witnessed an increase in their income growth. For farmers with the smallest landholdings, incomes grew by 10% annually between 2013 and 2019, compared to 2% for farmers with larger landholdings. This income growth offers further evidence of income disparity moderation in rural areas.
Significance of the World Bank Report
The World Bank’s report is crucial as India does not have any recent official estimates of poverty. The last expenditure survey was released by the National Sample Survey Organisation (NSSO) in 2011, which also included official estimates of poverty and inequality.
Major Poverty Alleviation Programs in India
Several poverty alleviation schemes are implemented in India, including Integrated Rural Development Programme, Pradhan Mantri Awaas Yojana, National Old Age Pension Scheme, Annapurna Scheme, Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Deendayal Antyodaya Yojana – National Rural Livelihood Mission, National Urban Livelihood Mission, Pradhan Mantri Kaushal Vikas Yojana, and Pradhan Mantri Jan Dhan Yojana.
About the World Bank and Its Role
Created as International Bank for Reconstruction and Development (IBRD) in 1944, alongside IMF, the World Bank Group has become a unique global partnership of five institutions working towards sustainable solutions to reduce poverty and build shared prosperity in developing countries. It comprises 189 member countries, including India.